What Does My Tax Code Mean? 1257L, K, BR, OT and Every Letter Decoded

Quick answer

Your tax code is a short string of numbers and letters on your payslip, P60 or coding notice. It tells your employer's payroll system exactly how much income tax to deduct from each payment. HMRC recalculates it at the start of every tax year and whenever your circumstances change.

The standard code for 2026/27 is 1257L. Decoded: the number 1257 times 10 equals £12,570 — your Personal Allowance. The letter L means you receive the standard allowance with no additions or deductions. If your code is anything other than 1257L, there is a specific reason — and it is worth understanding exactly what that reason is.

The core formula: how any code becomes a tax-free amount

The arithmetic is the same for every numerical tax code:

Number × 10 = annual tax-free allowance (£)

Examples:

Your employer spreads the annual allowance evenly across your pay periods. On a monthly payroll with code 1257L, HMRC instructs your employer to treat £1,047.50 per month as tax-free and tax anything above it at the appropriate rate. On a weekly payroll, the weekly tax-free amount is £241.73.

This is why a mid-year code correction can result in a refund or extra deduction in your next payslip — the payroll software recalculates your cumulative year-to-date position and adjusts automatically.

Every letter suffix decoded

Standard entitlement letters

Special flat-rate codes (no allowance applied)

Non-cumulative (emergency) suffixes

When you have a W1 or M1 suffix, the payroll system ignores everything that has happened earlier in the tax year. Each pay period is calculated fresh as if you had earned nothing before it. This almost always leads to overpaying tax when you have had periods of low or no income earlier in the year, because the system cannot see them.

K codes: when your deductions exceed your allowance

A K code operates in reverse. Instead of increasing your tax-free amount, it adds to your taxable income:

K475 means: add £4,750 to your annual taxable income

So if you earn £40,000 with code K475:

• Gross pay: £40,000
• Plus: £4,750 (K code addition)
• Taxable income for PAYE purposes: £44,750
• Tax: based on £44,750, not £40,000

The K number multiplied by 10 is the amount added to your taxable pay. Common reasons for a K code:

• Company car benefit in kind (BIK). A petrol or diesel car with a list price of £35,000 and a 30% BIK rate generates a £10,500 benefit. Deducted from the £12,570 PA, only £2,070 remains — but if the BIK is £14,000, your PA is wiped out and £1,430 is added, giving roughly K143.
• Underpaid tax from a previous year collected through this year's code.
• State Pension exceeding the Personal Allowance when you have no other PAYE income to absorb it.

HMRC applies a 50% cap to K codes: in any single pay period, the tax deducted via a K code cannot exceed 50% of your gross pay for that period. Any excess is deferred to the next period.

The 1257L code in detail

1257L is the code for 2026/27 for the vast majority of employees in England, Wales and Northern Ireland. Breaking it down fully:

• Personal Allowance: £12,570 — unchanged since April 2021; frozen until April 2028.
• The L suffix means you have the standard allowance, unmodified.
• Your employer taxes the first £12,570 of annual earnings at 0%, then:
  • £12,571 to £50,270: 20% (basic rate)
  • £50,271 to £125,140: 40% (higher rate)
  • Over £125,140: 45% (additional rate)

If your salary is £35,000 and your code is 1257L:

• Tax-free: £12,570
• Taxable at 20%: £22,430
• Income tax: £4,486/year or £373.83/month
• NI at 8% on £22,430: £1,794/year or £149.50/month
• Take-home: approximately £28,720/year

Marriage Allowance codes: M and N

Marriage Allowance allows one partner to transfer £1,260 of their unused Personal Allowance to the other. To be eligible, the transferring partner must earn below £12,570 and the receiving partner must be a basic-rate (20%) taxpayer.

The mechanics in the tax code:

• Partner giving the allowance gets code N (or 1131N): their PA is reduced by £1,260, leaving £11,310. Code: 1131N.
• Partner receiving the allowance gets code M (or 1383M): their PA rises by £1,260 to £13,830. Code: 1383M.

The saving: 20% of £1,260 = £252 per year to the receiving partner — or up to £1,260 if backdated four tax years (to 2022/23, 2023/24, 2024/25 and 2025/26 all at once in a single claim).

Once set up, the code rolls over automatically each year. If your circumstances change — one partner's income rises above £12,570 — you must cancel via the Personal Tax Account to avoid an underpayment.

Emergency codes and what to do about them

An emergency code — 1257L W1/M1, or sometimes just W1/M1 appended to your usual code — is applied when HMRC cannot confirm your correct code. The most common trigger is:

• Starting a new job without handing over a P45 from your previous employer.
• Taking on a second job.
• Returning to work after a gap (e.g. maternity leave, self-employment, career break).
• HMRC not yet having processed a notification of changed circumstances.

The problem with W1/M1: In a cumulative system, if you earned nothing in April and May then got a job in June, your employer's system would see zero income in earlier periods and apply a larger tax-free amount to June to compensate. Under W1/M1, each month is taxed in isolation — June looks like your first month, and you get only one-twelfth of the annual allowance against one month's salary, potentially pushing you into a higher rate.

What to do: Contact HMRC via the Personal Tax Account or by calling 0300 200 3300 as soon as possible. Provide your P45 to your new employer. Once HMRC updates the code, it will become cumulative and any overpaid tax in the same tax year will be refunded through payroll automatically. If the overpayment spans a prior tax year, you'll receive a P800.

Scottish tax codes: the S prefix

Scottish taxpayers have the same Personal Allowance (set UK-wide at Westminster) but different income tax bands above it. HMRC signals this to Scottish employers via an S prefix:

Scottish residents who move to England (or vice versa) mid-year should notify HMRC promptly, as the wrong prefix can result in significant under- or over-deduction given the divergence between Scottish and rUK rates — particularly above £43,663 where Scotland's 42% rate begins versus rUK's £50,270 line.

Welsh tax codes: the C prefix

Welsh taxpayers use a C prefix (e.g. C1257L). Welsh rates are currently set at the same levels as England and Northern Ireland, so in practice C codes produce identical tax deductions to L codes for now. The prefix exists to give the Welsh Government the technical ability to diverge in future Budgets.

The 0T code: your allowance has been used up

Code 0T means no Personal Allowance is applied to this income source. All income is taxed from the first pound:

• £1 to £37,700: 20%
• £37,701 to £125,140: 40%
• Over £125,140: 45%

You see 0T in several scenarios:

1. New job, no P45. HMRC defaults to 0T until it can confirm your position.
2. Your full allowance has been allocated to another income source. If you have two jobs and the first already uses all £12,570, the second gets 0T.
3. Your adjusted net income exceeds £125,140. At this level the Personal Allowance is fully withdrawn and 0T applies.
4. HMRC has added adjustments that reduce your PA to zero (e.g. very large company-car benefit or multiple prior-year underpayments).

If you see 0T on a main job and you earn less than £125,140, it almost certainly warrants a call to HMRC or a check in the Personal Tax Account — you are likely overpaying.

How to check your tax code

Five ways, in order of speed:

1. HMRC app — under "Tax codes", your current code and the full breakdown of how it was reached. Most people find this fastest.
2. Personal Tax Account at gov.uk/personal-tax-account — same information in a web browser.
3. Recent payslip — look for a field labelled "Tax code" or "Tax code used this period". It changes if HMRC issues a new code mid-year.
4. P60 — issued by your employer by 5 April each year; shows the code used in the final pay period of that tax year.
5. Coding notice (P2) — HMRC posts or emails these when your code changes. Many people miss them because they arrive in brown envelopes easily confused with junk mail.

How to fix a wrong tax code

Option 1: Personal Tax Account online (fastest)

1. Go to gov.uk/personal-tax-account and sign in with your Government Gateway credentials.
2. Select "Check your Income Tax" for the current year.
3. Review "How your tax code was calculated" — this lists every item HMRC has added or removed from your allowance.
4. Click "Tell HMRC about a change" for any item that is incorrect: remove a benefit you no longer have, correct an estimated investment income figure, cancel an old employment.
5. HMRC processes most changes within 48 hours. Your employer receives the new code and applies it in the next payroll run.

Option 2: Phone HMRC

Call 0300 200 3300, Monday to Friday, 8am to 6pm. Have your National Insurance number and a recent payslip available before calling. Average wait times have improved but allow 20–30 minutes during busy periods (April–June and January–February are the busiest). Agents can update the code in real time and confirm what triggered the wrong one.

Option 3: Via your employer

Some adjustments — particularly benefits in kind reported by your employer via payroll — must be corrected at source by the employer through their RTI (Real Time Information) submission. If HMRC tells you "your employer needs to update this benefit figure", raise it with your HR or payroll department directly.

The cumulative system: why corrections work mid-year

UK PAYE is designed to be self-correcting. Every time your employer runs payroll, the system asks: "How much total tax should this employee have paid from 6 April to today, given their total income to date and their current tax code?" It then deducts or refunds the difference versus what has already been taken.

This means:

• A wrong code corrected in August that overcharged you in April–July will generate an automatic refund in the August payslip.
• A wrong code corrected in February that undercharged you all year will mean a large deduction in February and March to catch up.
• The W1/M1 suffix breaks this mechanism — the system does not look back, it just taxes each period in isolation.

If a mistake spans two tax years, HMRC reconciles at year end and issues a P800 — a letter (or increasingly an app notification) saying you have overpaid or underpaid. Overpayments are repaid by BACS directly into your bank account, usually within six weeks of the P800. Underpayments are typically collected via an adjustment to next year's tax code.

Backdating: how far back you can claim

If you believe you have overpaid tax through a wrong code, you can reclaim overpayments going back four complete tax years. In May 2026, the four open years are:

Claims are made via the Personal Tax Account, through the R40 form (if you don't have an online account), or by calling HMRC. For employment income where tax was deducted through PAYE, HMRC can usually verify and process the refund without a full Self Assessment return.

The most common scenario that warrants a backdated claim is a company car removed one, two or three years ago that HMRC never removed from the tax code. Even a modest car benefit — say £5,000 per year — at 40% costs £2,000 in overpaid tax per year. Four years back is potentially a £8,000 refund.

P800: when HMRC sends you a calculation

Every summer, HMRC reconciles the previous tax year's PAYE records for people who do not file Self Assessment. The result is a P800 tax calculation. You receive one if:

• You paid too much tax: HMRC issues a refund, usually automatically via BACS or cheque.
• You paid too little tax: HMRC may ask for repayment or, for amounts under approximately £3,000, adjust next year's tax code to collect it.

If you receive a P800 showing an underpayment and you believe the calculation is wrong — perhaps because HMRC has not been told about a deductible expense or a corrected benefit figure — you have 60 days from the date of the P800 to challenge it via the Personal Tax Account or by phoning HMRC.

Try the calculators

To check what take-home pay your current tax code should be producing:

To model how a change in allowance (e.g. after a Marriage Allowance claim or a K code removal) would change your annual tax liability:

Sources

• HMRC: Tax codes
• HMRC: Check your Income Tax for the current year
• HMRC: Personal Tax Account
• HMRC PAYE Manual (PAYE12000–PAYE12100) — Tax code construction and K codes
• HMRC: Marriage Allowance
• HMRC: If you don't pay enough tax — P800