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.
Check your tax code impact
Enter your tax code in the calculator to see your exact take-home pay.
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
| Code | Meaning |
|---|---|
| 1257L | Standard — full £12,570 personal allowance |
| BR | Basic rate (20%) on all income — common for second jobs |
| D0 | Higher rate (40%) on all income |
| D1 | Additional rate (45%) on all income |
| 0T | No personal allowance — tax from the first pound |
| NT | No tax deducted |
| K codes | Negative allowance — taxable income is increased |
Scottish and Welsh tax codes
If you live in Scotland, your tax code starts with S (e.g. S1257L). Scottish income tax rates are different — 6 bands from 19% to 48%. If you live in Wales, your code starts with C (e.g. C1257L).
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.
If you've been on an emergency code for more than a few months, contact HMRC or check your online account. You may be owed a refund.
Why your tax code might be wrong
Common reasons for an incorrect code:
- Untaxed income — rental income, freelance work
- Benefits in kind — company car, private medical insurance
- Unpaid tax from a previous year
- Marriage Allowance transfer
- Starting a new job without a P45
How to check and fix your tax code
- Go to gov.uk/check-income-tax
- Sign in with your Government Gateway account
- Check your current code and the reason for it
- 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.
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
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