What is a Tax Code?
A tax code is a combination of numbers and letters (e.g., 1257L) used by your employer or pension provider to calculate the amount of Income Tax to deduct from your pay or pension.
It is issued by HM Revenue and Customs (HMRC). If your tax code is wrong, you could be paying too much or too little tax.
Common Tax Codes Decoded
1257L
This is the most common tax code for the 2024/25 tax year.
- 1257: Represents your tax-free Personal Allowance of £12,570.
- L: Means you are entitled to the standard tax-free Personal Allowance.
BR, D0, and D1
These codes are often used for a second job or pension.
- BR (Basic Rate): All income is taxed at 20%.
- D0 (Higher Rate): All income is taxed at 40%.
- D1 (Additional Rate): All income is taxed at 45%.
K Codes (e.g., K100)
Used when you have deductions (like company benefits or state pension) that exceed your Personal Allowance.
Essentially, you are paying tax on more than your actual salary to collect the tax owed on those benefits.
How to Check Your Tax Code
You can find your tax code on:
- Your payslip (usually near your National Insurance number)
- Your P60 (end of year certificate)
- Your P45 (if you recently left a job)
- Your Personal Tax Account on GOV.UK
If you think your tax code is wrong, you must contact HMRC directly. Your employer cannot change it without an instruction from HMRC.
See How Your Tax Code Affects Your Pay
A change in your tax code can significantly impact your monthly take-home pay. Use our calculator to model different scenarios.
See how your tax code affects your take-home pay with our UK Salary Calculator →