Tax Code

A tax code is the short alphanumeric string HMRC gives each PAYE employee, which tells the employer how much personal allowance to apply when running the payroll. The standard 2026 code is 1257L — the digits are the personal allowance divided by 10 (£12,570), and the L suffix marks a standard taxpayer.

Other suffixes signal special handling:

• M: receiving Marriage Allowance from a spouse (gains £1,260 of allowance).
• N: transferring £1,260 of allowance to a spouse under Marriage Allowance.
• T: temporary code, or income includes elements that need review.
• K: negative allowance — typically because of a large company-car BIK or a tax-deductible benefit. The number is added to gross pay before tax is calculated.
• BR / D0 / D1: flat-rate code for second jobs or pensions, taxing all income at basic / higher / additional rate respectively.
• NT: no tax — used for tax-exempt income like seafarer earnings.

Wrong codes are common. The two most frequent causes: a benefit (like medical insurance) was added or removed and HMRC hasn’t refreshed the code, or income from a second job is taxed at BR but the personal allowance was already used elsewhere. Year-end P800s reconcile the difference.

Use the PAYE calculator to model take-home pay under any tax code.