UK Tax Codes Explained: What Your Code Means and How to Check It

Millions of UK employees are on the wrong tax code — and overpaying tax as a result. HMRC estimates it issues incorrect codes to hundreds of thousands of people every year.

Here's how to read your tax code, understand what it means, and fix it if it's wrong. For a broader look at your payslip deductions, see our how to read your payslip guide. If a wrong code has caused an overpayment, see our HMRC tax refund guide.

What is a tax code?

Your tax code tells your employer how much of your income is tax-free before they start deducting PAYE tax.

It appears on your:

• Payslip
• P60 (end of year summary)
• P45 (when you leave a job)
• HMRC online account at gov.uk/check-income-tax

How to read your tax code

Most tax codes are a number followed by a letter. The number × 10 = your tax-free allowance.

The most common tax codes

Scottish and Welsh tax codes

Emergency tax codes

If you start a new job without a P45, HMRC may put you on an emergency code:

• 1257L W1 or 1257L M1 — taxed on a week/month basis, not cumulatively
• BR — all income taxed at 20%

Emergency codes often result in overpaying tax. Once HMRC receives your details, they'll correct it and you'll get a refund.

Why your tax code might be wrong

Common reasons for an incorrect code:

1. Untaxed income — rental income, freelance work
2. Benefits in kind — company car, private medical insurance
3. Unpaid tax from a previous year
4. Marriage Allowance transfer
5. Starting a new job without a P45

How to check and fix your tax code

1. Go to gov.uk/check-income-tax
2. Sign in with your Government Gateway account
3. Check your current code and the reason for it
4. If it's wrong, use the online form to tell HMRC

HMRC will issue a new code to your employer and adjust your tax going forward. If you've overpaid, you'll receive a refund — either through your payslip or a cheque.

A real example: wrong code vs correct code

Here is what a wrong tax code costs on a typical salary.

Sarah earns £38,000. Her employer has her on a BR code after a job change, meaning all her income is taxed at 20% with no Personal Allowance applied.

Sarah is overpaying £210 every month — £2,514 over the year. HMRC will eventually refund this, but only if she claims it. Checking her code at gov.uk takes two minutes.

What this means for you

If you earn £45,000 and your payslip shows a BR code, you are paying 20% tax on your entire salary with no Personal Allowance — an overpayment of around £2,514/year. Checking your code at gov.uk takes two minutes.

At £60,000, a K code or an incorrect benefit-in-kind adjustment can cost hundreds per month. If your code is not 1257L or a recognised variant, it is worth investigating before the end of the tax year.

Salary sacrifice does not change your tax code, but it reduces your Adjusted Net Income — which can restore your Personal Allowance above £100,000 and eliminate the Child Benefit charge above £60,000.

How salary sacrifice affects your tax code

Salary sacrifice doesn't change your tax code directly — but it reduces your Adjusted Net Income, which can:

• Restore your Personal Allowance if you earn over £100,000
• Eliminate the High Income Child Benefit Charge
• Move you into a lower tax band

Try the TaxCal UK calculator to estimate your take-home pay.

FAQ

How do I find my tax code?

It appears on your payslip, P60, P45, and in your HMRC personal tax account at gov.uk/check-income-tax.

What does the letter in my tax code mean?

L means you get the standard Personal Allowance. S means Scottish taxpayer. C means Welsh taxpayer. M and N relate to Marriage Allowance. K means you have a negative allowance.

Can HMRC change my tax code without telling me?

Yes. HMRC can update your code and notify you by letter or through your online account. Always check your payslip when your code changes.

How long does it take to fix a wrong tax code?

HMRC usually updates codes within a few weeks of being notified. Your employer applies the new code from the next payroll run. Any overpaid tax is refunded through your payslip or a direct payment.