Tax code

Your tax code tells your employer or pension provider how much income to treat as tax-free when they apply PAYE. The default code for someone with a single job and the full Personal Allowance is 1257L — the digits are the allowance divided by 10 (£12,570), and the letter describes your situation.

Common letters: L — standard Personal Allowance. BR — all income taxed at the basic rate (20%), typically a second job. D0 — all income at the higher rate (40%). NT — no tax. K — negative allowance, used when taxable benefits or owed tax exceed the allowance. M and N — transferred Marriage Allowance (received or given).

Emergency codes end in W1, M1, or X — applied on a non-cumulative basis when HMRC doesn't have your full history yet. They usually resolve once HMRC catches up, but can leave you over- or under-taxed in the meantime.

You can check your current code on your payslip, P60, or in your HMRC Personal Tax Account. If it looks wrong — especially after a job change or when you start claiming pension contributions — contact HMRC directly. Don't assume your employer will spot it.

Related terms

• Personal Allowance — The first slice of income you can earn tax-free each year — £12,570, frozen until April 2031.
• Self Assessment — HMRC's system for declaring income not taxed at source — filed annually by the self-employed, landlords, and many directors.