Your tax code determines how much Income Tax is deducted from your pay or pension before you receive it. Most people never look closely at theirs, yet an incorrect tax code is one of the most common reasons people end up paying too much — or too little — tax without realising it. Here's how to read yours and check it's right.
Where to find your tax code
Your tax code appears on your payslip, your P60, your P45 if you leave a job, and in your Personal Tax Account on GOV.UK. It's usually a combination of numbers and a letter, such as 1257L — the most common code for people with the standard tax-free Personal Allowance and no other adjustments.
What the numbers mean
The number in your tax code, multiplied by 10, roughly represents your tax-free Personal Allowance for the year. A code of 1257L means you can earn £12,570 before Income Tax is due on the rest, spread evenly across your pay periods. If your number is different, it usually means something has adjusted your allowance up or down — for example, unpaid tax from a previous year, benefits in kind like a company car, or additional allowances you're entitled to claim.
What the letters mean
| Letter | What it generally indicates |
|---|---|
| L | Standard tax-free Personal Allowance, no special adjustments |
| M / N | Marriage Allowance received (M) or transferred to a spouse/partner (N) |
| T | HMRC needs to review your code — other items affect your allowance |
| K | Deductions (e.g. unpaid tax, taxable benefits) exceed your allowance, so extra tax is collected |
| BR | All income taxed at the basic rate, usually for a second job or pension with no allowance applied |
| D0 / D1 | All income taxed at the higher or additional rate, typically for a second source of income |
| 0T | No allowance applied at all — often used when HMRC lacks enough information |
| W1 / M1 (or X) | "Emergency" non-cumulative basis, calculated on that pay period alone rather than the whole year to date |
Why your code might be wrong
- You started a new job and your new employer hasn't yet received full details from HMRC or your previous employer.
- You have more than one job or pension and the allowance has been applied incorrectly, or twice, or not at all.
- Your circumstances changed — a company benefit was added or removed, you started or stopped receiving Marriage Allowance, or you moved into a different income band.
- HMRC is collecting a previous underpayment through your current code (shown as a K code or a reduced allowance).
Worked example
If you're on tax code BR in a job where you should actually be getting your full Personal Allowance, every pound of pay from that job is taxed at 20%, with none of it tax-free. On a salary of £20,000 taxed wrongly under BR instead of the standard allowance, you could overpay several thousand pounds in tax over a year until the code is corrected — a significant and avoidable loss.
How to check and fix it
- Log in to your Personal Tax Account on GOV.UK to see your current code and the reasoning HMRC has recorded for it.
- Use HMRC's online tax checker or the numbers on your P60/payslip to confirm the code matches your actual circumstances.
- If it looks wrong, contact HMRC directly (by phone or through your Personal Tax Account) — they can update it and your employer or pension provider will apply the new code going forward.
- If you've overpaid tax due to a wrong code, HMRC can issue a refund, sometimes automatically after a tax year ends, or you can claim directly.
Common mistakes
- Assuming payroll or HMRC never gets it wrong — errors are common, especially around job changes.
- Not checking your code after a life change, such as starting a second job, receiving a benefit in kind, or a pension starting alongside employment.
- Leaving an emergency or "BR" code in place for months without querying it.
What to do next
Check your current tax code against your circumstances at least once a year, and immediately after starting a new job, taking on a second income, or receiving a new employee benefit — a five-minute check in your Personal Tax Account can save you from months of over- or under-paid tax.