Understanding UK tax codes and letters
In the UK, your employer or pension provider uses your PAYE tax code to work out how much Income Tax to deduct before paying your wages. A standard tax code consists of numbers and letters, such as 1257L. Multiplying the number by 10 gives your annual tax-free Personal Allowance (£12,570 for 1257L).
The letters in your tax code tell HMRC about your specific employment or tax situation. For example, 'L' indicates the standard personal allowance, 'M' means you have received Marriage Allowance from a partner, 'N' means you transferred allowance to a spouse, 'T' means HMRC is reviewing your code, and 'BR' or '0T' means no tax-free allowance is available.
Worked example of the standard 1257L tax code
Suppose an employee in England earns £35,000.00 annually under standard tax code 1257L paid on a monthly pay frequency. The tax code 1257L entitles the employee to a tax-free personal allowance of £12,570.00.
Subtracting the £12,570.00 personal allowance from £35,000.00 leaves £22,430.00 in annual taxable income. Taxed at the standard basic rate of 20%, the employee's total annual Income Tax liability is £4,486.00.
Across 12 equal monthly pay periods, this results in £373.83 of Income Tax deducted each month, producing a monthly post-tax pay of £2,542.83 and an effective Income Tax rate of 12.82%.
Special tax codes: K, BR, D0, and emergency codes
A 'K' code (such as K500) applies when your taxable company benefits (such as a company car or private medical insurance), state pension, or unpaid tax from a previous year exceed your Personal Allowance. Instead of giving tax-free pay, a K code adds extra taxable income to your pay each period, though HMRC caps tax deductions at 50% of your gross pay.
'BR' stands for Basic Rate: your entire income from that job or pension is taxed at 20% without any personal allowance, typically because your allowance is allocated to your primary job. '0T' means you have zero allowance remaining, while emergency codes ending in 'W1', 'M1', or 'X' calculate tax strictly on that period's earnings without carrying forward unused allowances from earlier months.
For a comprehensive assessment of your annual tax brackets, visit our UK tax calculator.
To see combined Income Tax and National Insurance deductions, use the tax and NI calculator.
Scottish tax code prefixes (S codes)
If your main home is in Scotland, your tax code will begin with the letter 'S', such as S1257L or SBR. The Scottish Parliament sets devolved income tax rates and brackets, ranging from the starter rate (19%) through to the top rate (48%).
Even though the tax-free personal allowance remains aligned with the rest of the UK at £12,570, Scottish taxpayers pay tax according to Scottish bands on earnings above their allowance.
Inputs for the tax code calculator
Tax year
The UK tax year for the assessment. The tax year runs from 6 April to 5 April.
Tax code type
The prefix, letter or category of your UK PAYE tax code (such as L, K, BR, 0T, or NT).
Tax code digits
The numeric digits of your tax code (e.g. 1257 in 1257L represents £12,570 allowance).
Emergency tax indicator
Whether your code has W1, M1, or X indicating non-cumulative emergency calculation.
Gross earnings
Your total annual earnings or pension before any tax or National Insurance deductions.
Pay frequency
How often you receive your salary or pension payments (annual, monthly, or weekly).
Tax region
Your tax jurisdiction for UK Income Tax rates and tax band thresholds.
CALCULATOR QUESTIONS
Tax code calculator questions
What does tax code 1257L mean?
1257L is the standard tax code for most UK employees with one job. It means you are entitled to the standard tax-free Personal Allowance of £12,570 per year before paying Income Tax.
What is a K tax code?
A K tax code means you have untaxed income or company benefits (like a company car) worth more than your Personal Allowance. The number multiplied by 10 is added to your taxable income so your employer deducts the extra tax owed.
Why is my tax code BR?
A BR code means all your earnings from that employment or pension are taxed at the basic rate of 20% with no tax-free allowance. This usually happens on a second job or pension when your Personal Allowance is already used on your main job.
What should I do if my tax code is wrong?
If you think your tax code is incorrect, check your Personal Tax Account online on GOV.UK or contact HMRC directly. HMRC will issue an updated tax code notice to your employer.