Knowing the list of tax codes and what they mean might seem like a lot to wrap your head around. But they’re vital because they tell you exactly how much you’re paying the government.
Sometimes, they’re incorrect—meaning you could either end up with a nice tax refund or an unexpected bill from HM Revenue and Customs (HMRC).
For that reason alone, it’s worth knowing what tax codes mean, the different tax codes in the UK, and what to do if you’re in the wrong tax code.
Let’s get started.
What is a tax code?
In the UK, a tax code is a combination of numbers and letters issued by HMRC to determine how much income tax should be deducted from an individual’s salary or pension.
It reflects a person’s tax-free allowance and any adjustments for benefits, deductions, or additional income. Employers and pension providers use the tax code to calculate the correct amount of tax to deduct.
How to read a tax code
Understanding your tax code is easier than it looks.
It’s usually a mix of numbers and letters. The numbers show how much tax-free income you’re allowed, while the letters explain any special tax rules that apply to you.
For example, if your tax code is 1257L, it means you get the standard Personal Allowance of £12,570 before you start paying tax.
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The list of tax codes and what they mean
Here’s your list of tax codes and what they mean:
Tax code | Meaning | Explanation |
L | Standard Personal Allowance | You’re entitled to the standard tax-free Personal Allowance (£12,570). |
M | Marriage Allowance | You’ve received a transfer of 10% of your partner’s Personal Allowance. |
N | Marriage Allowance | You’ve transferred 10% of your Personal Allowance to your partner. |
T | Other calculations involved | Your tax code includes other calculations (such as company benefits) to determine your Personal Allowance. |
0T | No Personal Allowance or emergency code | Your Personal Allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code. |
BR | Basic rate tax code | All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension). |
D0 | Higher rate tax code | All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension). |
D1 | Additional rate tax code | All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension). |
NT | No tax | You’re not paying any tax on this income. |
W1 | Emergency tax code | Used as an emergency tax code for the current pay period (the “week 1” or “month 1” system), meaning tax is calculated without using your full Personal Allowance. |
M1 | Emergency tax code | Similar to W1, used as an emergency tax code for the current pay period, typically for those on a month-to-month basis. |
X | Emergency tax code | Another emergency tax code, usually applied when no other tax code is available, and the Personal Allowance isn’t applied. |
K | Income exceeding allowance | You have income that isn’t being taxed elsewhere and is worth more than your tax-free Personal Allowance (such as unpaid tax from a previous year or taxable company benefits). |
What’s an emergency tax code?
An emergency tax code is a temporary code that HMRC gives you when they don’t have enough information to work out your correct tax code.
This often happens if you start a new job, move from self-employment to PAYE, or start receiving a company pension. It can also occur if your new employer hasn’t received your P45 from your previous job or if you haven’t completed a new starter checklist.
You’ll usually spot an emergency tax code if your payslip shows W1, M1, or X. They’ll normally follow the standard 1257L code.
These codes can mean you’re paying too much tax (or sometimes too little), but don’t worry—it’s usually sorted once HMRC gets the right details from you or your employer.
What you should do if you’re in the wrong tax code
If you think your tax code is wrong, don’t ignore it—get in touch with HMRC as soon as possible.
You can either:
- Call them on 0300 200 3300
- Log in to your personal tax account online to report the issue.
If you’ve overpaid tax, HMRC will usually update your tax code and let your employer know. The extra tax you’ve paid will be refunded through your wages, so you’ll see a bit more in your payslip. If the overpayment was from a previous tax year, HMRC might send you a cheque instead.
On the other hand, if you’ve underpaid tax, HMRC will want to collect what you owe. If it’s less than £3,000, they’ll likely adjust your tax code so you pay a bit more each month. But if you owe more than that, you’ll probably get a separate tax bill.
Do you still have questions about the different tax codes in the UK?
We know tax codes can be confusing, but you don’t have to figure them out on your own. Whether you’re unsure about your tax code, think it might be wrong, or just want to understand it better, we’re here to help.
Get in touch to see how we can make tax codes (and payroll) simple for you.
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