What does a K tax code mean?

Full answer

A **K tax code** is used when the value of deductions HMRC wants to collect exceeds your Personal Allowance. Instead of reducing your taxable pay, HMRC adds the excess to your gross pay for tax calculation purposes. **How a K code works:** Normally, a 1257L code gives you a £12,570 allowance. If your company car benefit is worth £15,000, your deductions (£15,000) exceed your allowance (£12,570) by £2,430. HMRC issues a **K243** code, meaning £2,430 is **added** to your taxable income rather than subtracted. **Common causes of K codes:** - **Company car or van benefits** with high CO2 emissions - **Fuel benefits** provided by employer - **Unpaid tax from previous years** being collected via PAYE - **State Pension + employment:** State Pension uses up PA, leaving employment income with a K code to collect the State Pension tax - **Medical/health insurance benefits in kind** **The 50% regulatory limit:** HMRC rules prevent a K code from taking more than **50% of your gross pay** in any pay period — regardless of what the code mathematically suggests. This protects workers from losing more than half their salary to tax in a single payroll run. **How to query a K code:** 1. Check your **P2 PAYE coding notice** — HMRC sends this each spring 2. Log in to **HMRC Personal Tax Account** (gov.uk/personal-tax-account) to see your current code 3. If the code seems wrong, call HMRC on **0300 200 3300** or use the online query tool 4. Ask your employer's payroll team to confirm the code in use

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