UK Tax Code Letters Explained 2026/27: What L, M, N, K, T, W1, M1 All Mean

What Is a Tax Code and Why Does It Matter?

Your tax code is used by your employer (or pension provider) to calculate how much income tax to deduct from your pay under PAYE. It tells them how much income you can earn before tax kicks in, and whether there are any adjustments -- such as taxable benefits or uncollected tax from previous years.

Getting your tax code wrong means either:

• Paying too much tax (and waiting for a refund), or
• Paying too little tax (and facing an unexpected bill later)

In 2026/27, the standard tax code is 1257L, reflecting the £12,570 personal allowance.

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How Tax Codes Are Structured

A tax code typically has a number and a letter (or letters). The number tells you the amount of tax-free income you receive (multiply by 10), and the letter tells you why that number applies.

For example:

• 1257L -- £12,570 personal allowance (12,570 / 10 = 1,257), standard entitlement (L)
• 944L -- £9,440 tax-free income (personal allowance reduced by, e.g., a benefit in kind worth £3,130)

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The Most Common Tax Code Letters

L -- Standard Personal Allowance

The letter L means you receive the standard personal allowance for the year -- £12,570 in 2026/27. This is the most common code letter, used by the majority of UK employees.

1257L is the standard code. If your payslip shows this, you are on the correct standard setting.

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M -- Marriage Allowance Recipient

The letter M means you have received a transfer of 10% of the personal allowance from your spouse or civil partner. This adds roughly £1,257 to your personal allowance, increasing it from £12,570 to £13,827.

You see code 1383M (or similar) if you are the recipient partner in a Marriage Allowance arrangement. This only works if the transferring partner earns below the personal allowance.

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N -- Marriage Allowance Transferor

The letter N is the flip side of M. If you are the partner who transferred 10% of your personal allowance to your spouse, your code will have an N. Your personal allowance is reduced by the transferred amount.

You might see 1131N (or similar), reflecting a personal allowance reduced to £11,310.

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T -- Complex or Under Review

The letter T means HMRC needs to review your tax code periodically because your tax affairs are complex. It can also appear when your income is between £100,000 and £125,140, where the personal allowance is being tapered or withdrawn.

A T code requires HMRC to agree the code each year rather than it updating automatically.

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K -- Negative Allowance (Tax Owed or Large BIK)

A K code is unusual and means your deductions exceed your personal allowance, resulting in a negative allowance. Instead of having tax-free income, you have extra income added to your taxable pay each period.

Common reasons for a K code:

• A high-value company car benefit that exceeds your personal allowance
• Underpaid tax from previous years being collected through PAYE
• State pension plus other income pushing you into negative allowance territory

Example: K497 means £4,970 of additional income is added to your pay for tax purposes each year on top of your gross salary.

There is a safeguard rule: your employer can never deduct more than 50% of your gross pay in a single pay period due to a K code, even if the code would theoretically require it. The remaining tax would be owed at year end.

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D0 and D1 -- Fixed Rate Codes

• D0 -- all income from this source taxed at 40% (higher rate). Used when you have multiple jobs and your personal allowance is allocated elsewhere.
• D1 -- all income taxed at 45% (additional rate). Used for very high earners with multiple income sources.

These are common for second jobs or pensions where your full personal allowance has already been used against your primary income.

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0T -- No Personal Allowance

The 0T code means no personal allowance is being applied. All income is taxed at the appropriate rate from the first pound. You might see this if:

• You have a new job and have not provided a P45 or starter checklist
• Your personal allowance has been entirely used or withdrawn
• HMRC is waiting for information to issue a correct code

Unlike a BR code (see below), 0T still applies the correct rate bands (20%, 40%, 45%) rather than taxing everything at one flat rate.

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BR -- Basic Rate on All Income

BR means all income from this source is taxed at 20%, with no personal allowance applied. This is typically used for:

• Second jobs
• Additional pension income
• Temporary situations while HMRC works out the correct code

It differs from 0T in that 0T applies the band rates progressively, whereas BR applies 20% flat to everything regardless of total income level.

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W1 and M1 -- Emergency Codes

W1 (week 1 basis) and M1 (month 1 basis) are emergency codes. They appear after the main code, for example 1257L W1 or 1257L M1.

Emergency codes mean your employer calculates each period's tax independently -- as if it is the first period of the year -- without taking account of what you have earned or paid so far. This avoids large underpayments or overpayments in uncertain situations.

You are likely to see W1/M1 if:

• You have started a new job without a P45
• You have recently come off Jobseeker's Allowance
• HMRC cannot confirm your year-to-date position

Emergency codes are temporary. Once HMRC or your employer receives the correct information, the code reverts to a cumulative basis and any over- or under-payment is corrected automatically.

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NT -- No Tax

NT means no tax is deducted at all. This is rare and applies in specific circumstances, such as:

• Non-UK residents (taxed in their home country under a double taxation treaty)
• Certain Crown employees working overseas
• Very specific HMRC-agreed arrangements

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How HMRC Issues Tax Codes

HMRC issues a PAYE Coding Notice (form P2) when your tax code changes. This is sent to your home address or appears in your Personal Tax Account online. It explains:

• What your new code is
• Why adjustments have been made
• What income and deductions HMRC has used

You should check this notice carefully each time it arrives. Errors are more common than people realise, particularly if you have:

• Started or ended a benefit in kind
• Changed jobs
• Started receiving a state or private pension alongside employment
• Had underpaid tax in a previous year

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Checking and Correcting Your Tax Code

Check Your Code

Log into your Personal Tax Account at gov.uk. You can see:

• Your current tax code for each employment or pension
• A breakdown of adjustments
• Your income estimates HMRC is using

Correct a Wrong Code

If you believe your code is wrong:

1. Call HMRC on 0300 200 3300 or use the online service
2. Explain what is wrong and provide correct figures (e.g. corrected BIK value, no longer receiving a benefit)
3. HMRC will issue a revised code to your employer

Any overpaid tax is usually refunded at the end of the tax year automatically. If you believe you have significantly overpaid, you can request an in-year refund via a P50 form (if you have stopped working) or by contacting HMRC directly.

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2026/27 Quick Reference

Your tax code is one of the most important numbers on your payslip. A wrong code can cost you money or lead to an unexpected bill -- so it pays to check it every year when you receive your PAYE Coding Notice.