UK tax codes explained in plain English

The golden rule: multiply the number by 10

Your code is made of a number and a letter. The number times ten is your tax-free personal allowance for the year, the income you don't pay tax on. Take 1257L: 1257 × 10 = £12,570, the standard allowance for 2026/27. A code of 2000L would mean a higher £20,000 allowance, while 0T means no allowance at all: every pound is taxable.

HMRC works in this shorthand because it keeps payslips short; your employer feeds the code into PAYE and the allowance is spread across the year's pay periods. Want to see your exact figures? Type your own code into the tax code calculator.

What the letters mean

The letter tells you why that allowance applies. The number still dictates the maths, but the letter flags the circumstance:

• L: you are entitled to the basic personal allowance.
• M: marriage allowance recipient: you've received £1,260 of allowance transferred from your spouse or civil partner.
• N: marriage allowance donor: you've transferred £1,260 of your allowance away.
• T: HMRC is reviewing other items and uses a different calculation for you.
• X: an emergency or non-cumulative code issued before HMRC finalises your details.
• Y: the age-related allowance (rare now; most older taxpayers get the standard L code).

Because M and N codes shift allowance, the marriage allowance is usually worth about £252 of tax a year at the basic rate: the £1,260 transfer taxed at 20%. The take-home pay calculator applies any M/N code you enter exactly, so you can see the effect of the transfer.

Flat codes: BR, D0, D1 and NT

These don't carry a number because every pound is taxed at a single rate and the personal allowance doesn't apply. You most often see them on a second job or a private pension, where the primary job has already used your allowance:

• BR: all income at 20%.
• D0: all income at 40%.
• D1: all income at 45%.
• NT: no tax deducted.

If you've been put on BR for a second job it usually means HMRC has assumed your main job uses the full allowance, so check both payslips to avoid over- or under-paying.

K codes: when your allowance goes negative

A code beginning with K flips the sign: your taxable benefits, taxable pay or underpaid tax from a previous year exceed the allowance, so HMRC effectively gives you a negative allowance. The shortfall is added to your salary and you pay tax on your very first pound. A code like K497X adds about £4,970 to your taxable income for the year.

If you owe less than expected, HMRC issues a new code; if you think a K code is wrong, it's worth checking with HMRC rather than waiting for a tax bill to catch up.

The S and C prefixes, and emergency codes

A letter S before the code means Scottish income-tax rates apply (e.g. S1257L); C marks a Welsh taxpayer. The allowance is the same, but the tax bands behind it are different; the income tax calculator switches to the Scottish bands for you.

The suffixes W1 and M1 (week 1 / month 1) are emergency non-cumulative codes: each pay period is taxed on its own rather than against the year-to-date, so no underpayment or overpayment carries across. They appear when you start a new job before HMRC has your previous earnings. Once confirmed, a normal cumulative code replaces them.

The £100k taper still applies to the standard code

The standard 1257L code keeps the ordinary rules: once your adjusted income passes £100,000 the allowance falls by £1 for every £2 earned, disappearing entirely at £125,140. That's the 60% effective marginal rate people call the £100k tax trap . A fixed allowance like 2000L is applied verbatim, reflecting how HMRC sets codes in practice, and the tax code calculator handles both correctly.