What Does My Tax Code Mean? Tax Codes Explained.

What is a tax code?

Your tax code is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension.

HM Revenue and Customs (HMRC) will tell them which code to use to collect the right tax.

Your tax code will normally start with a number and end with a letter.

1250L is the tax code currently used for most people who have one job or pension.

Where do I find my tax code?

Your tax code will be on your payslips or P45, alternatively, you can check your Income Tax online to see:

  • what your tax code is
  • if your tax code has changed
  • how your tax code is worked out
  • how much tax you’re likely to pay

How the numbers are worked out

The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year.

  1. HMRC works out your tax-free Personal Allowance.
  2. Income that you have not paid tax on (such as untaxed interest or part-time earnings) and the value of any benefits from your job (such as a company car) are added up.
  3. The income that you have not paid tax on is taken away from your Personal Allowance. What’s left is the tax-free income you’re allowed in a tax year.
  4. The last digit in the tax-free income amount is removed.

What the letters mean

Letters in your tax code refer to your situation and how it affects your Personal Allowance.

LettersWhat they mean
LYou’re entitled to the standard tax-free Personal Allowance
MMarriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance
NMarriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner
TYour tax code includes other calculations to work out your Personal Allowance
0TYour Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
BRAll 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)
D0All 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)
D1All 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)
NTYou’re not paying any tax on this income
SYour income or pension is taxed using the rates in Scotland
S0TYour Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
SBRAll your income from this job or pension is taxed at the basic rate in Scotland (usually used if you’ve got more than one job or pension)
SD0All your income from this job or pension is taxed at the intermediate rate in Scotland (usually used if you’ve got more than one job or pension)
SD1All your income from this job or pension is taxed at the higher rate in Scotland (usually used if you’ve got more than one job or pension)
SD2All your income from this job or pension is taxed at the top rate in Scotland (usually used if you’ve got more than one job or pension)
CYour income or pension is taxed using the rates in Wales
C0TYour Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code 
CBRAll your income from this job or pension is taxed at the basic rate in Wales (usually used if you’ve got more than one job or pension) 
CD0All your income from this job or pension is taxed at the higher rate in Wales (usually used if you’ve got more than one job or pension) 
CD1All your income from this job or pension is taxed at the additional rate in Wales (usually used if you’ve got more than one job or pension)

If your tax code has ‘W1’ or ‘M1’ or ‘X’ at the end

These are emergency tax codes, and instead of your employer looking at your cumulative earnings in calculating your tax, your yearly allowance will be broken down into pay periods and you will be taxed accordingly.

If you’re on an emergency tax code your payslip will show:

  • 1250 W1
  • 1250 M1
  • 1250 X

These mean you’ll pay tax on all your income above the basic Personal Allowance.

You may be put on an emergency tax code if you’ve started:

  • a new job
  • working for an employer after being self-employed
  • getting company benefits or the State Pension

Emergency tax codes are temporary. Request an update to your tax code here.

If your tax code has a ‘K’ at the beginning

Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance.

For most people, this happens when you’re:

  • paying tax you owe from a previous year through your wages or pension
  • getting benefits you need to pay tax on – these can be state benefits or company benefits

Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension – even if another organisation is paying the untaxed income to you.

Employers and pension providers cannot take more than half your pre-tax wages or pension when using a K tax code.

Updating your tax code

You may be put on an emergency tax code if you change jobs. HMRC will correct it automatically after you’ve given your employer details of your previous income or pension.

Your employer will get these details from your P45 – if you do not have one, they should ask you for further information.

HMRC may also update your tax code if:

If you pay too much or too little tax over the tax year, HMRC will send you a P800 or a Simple Assessment tax calculation after the tax year has ended. This will tell you how to get a refund or pay the tax you owe.

Tell HMRC about a change that affects your tax code

If you think your tax code might be wrong, you can use the online check your Income Tax service to tell HMRC about a change in your circumstances.

If you cannot use the online service you can contact HMRC.

If you’re contacting HMRC on someone else’s behalf

If you need to tell HMRC about a change in someone else’s circumstances (for example, because you’re their accountant) fill in a PAYE Coding Notice query form.

After your tax code changes

HMRC will write to you or email you if they change your tax code.

They will also tell your employer or pension provider that your tax code has changed.

Your next payslip should show:

  • your new tax code
  • adjustments to your pay if you were paying the wrong amount of tax

Contains public sector information updated on 30 July 2020 and licensed under the Open Government Licence v3.0.


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