Understanding Tax Codes

Understanding UK Tax Codes: A Complete Guide

Your tax code tells your employer how much tax to deduct from your salary. Most UK employees are on 1257L — but there are dozens of variations. Getting it wrong can mean overpaying (or underpaying) by thousands.

What Does 1257L Mean?

1257L is the standard tax code for most UK employees in 2026/27:

• 1257 = your tax-free Personal Allowance is £12,570
• L = you are entitled to the standard tax-free Personal Allowance

If you earn £35,000 with tax code 1257L, your employer calculates tax on £35,000 − £12,570 = £22,430 of taxable income.

Common Tax Codes Explained

BR (Basic Rate)

All income is taxed at the basic rate of 20%. No Personal Allowance. Common if you have a second job or pension.

D0 (Higher Rate)

All income taxed at 40%. No Personal Allowance. Often used for second jobs where your main job already uses your full allowance.

D1 (Additional Rate)

All income taxed at 45%. Used for very high second incomes.

0T (Zero Allowance)

No Personal Allowance, but taxed through the normal bands (20%, 40%, 45%). Used when HMRC doesn't have enough information to assign a proper code.

NT (No Tax)

No tax deducted. Very rare — usually for non-UK residents with specific circumstances.

K Codes (K475, K1000, etc.)

A negative allowance. If you have untaxed income (e.g., benefits in kind, state pension) that exceeds your Personal Allowance, HMRC adds the excess to your taxable income. K475 means £4,750 is added to your taxable income.

Why Your Tax Code Might Change

• New job — you might start on an emergency tax code (1257L W1/M1 or 0T)
• Company benefits — a company car or private medical insurance reduces your code
• State pension — if you receive state pension and work, your code is adjusted
• Underpaid tax — HMRC may collect underpayments through your code
• Marriage Allowance — if you transfer part of your allowance to your spouse, your code changes
• Blind Person's Allowance — adds £3,070 to your tax-free amount

How to Check Your Tax Code

Log into your HMRC Personal Tax Account to see your current tax code, any adjustments, and estimated tax for the year.

If your code looks wrong, contact HMRC on 0300 200 3300. They can usually correct it over the phone.

Try It in the Calculator

PayKeep supports all common tax codes. Enter your code in the Advanced Options section to see exactly how it affects your take-home pay.