A tax code tells your employer how much income tax they need to take from your wage before you receive it. If you receive money from a workplace or personal pension, a tax code will tell your pension provider how much tax to take off before they pay you a lump sum or income. But how do tax codes work and how do you know if yours is correct?
In this article, we’ll cover:
How do I find out my tax code?
There are several ways of finding out your tax code. One way is on any payslip you receive from an employer or your payment advice (P60) from your pension provider. You may have different tax codes for each job or pension.
Another place to look is on the yearly ‘notice of coding’ from HM Revenue and Customs (HMRC). This is a statement which sets out your tax code for the coming tax year (or any changes in your tax code) and explains how it was worked out. You normally receive your notice of coding in February or March.
If you have registered with HMRC for an online tax account or have downloaded the HMRC app, you should be able to see your tax coding notices online.
What do the numbers and letters in the tax code mean?
The numbers and letters used in a tax code can be confusing. But let’s explain it with an example. Supposing you have a tax code based on the full personal allowance in 2025/26 of £12,570. This is the amount of income you can earn or receive between April 6th and April 5th the following year without having to pay tax on it.
If you’re entitled to the full personal allowance, on your tax code, HMRC will have taken off the final digit from the £12,570 personal allowance and added a letter code to give information to employers and pension providers about how much tax to deduct.
Tax code 1257L
The most common tax code in 2025/26 is 1257L. The letter L tells the employer or pension provider that you are entitled to the full personal allowance, and that they should take off tax at the basic, higher or additional rate depending on how much income you have received over £12,570 in that tax year.
Tax code letters explained
Your tax code may be made up of different numbers or letters. The main letters used in tax codes are:
- BR (basic rate): This tells your employer or pension provider to take off 20% tax on all income. This is often used if you have more than one job or pension.
- C: at the start of your tax code tells your employer or pension provider to take off tax based on the tax bands applicable in Wales.
- D0: tells your employer or pension provider to take off 40% tax on all income.
- D1: tells your employer or pension provider to take off 45% tax on all income.
- K: at the start of your tax code means you have income that is not being taxed another way and it’s worth more than your tax-free personal allowance.
- L: tells your employer that you’re entitled to the full personal allowance.
- M: means you have received a transfer of 10% of your husband wife or civil partner’s personal allowance under the Marriage Allowance rules. There’s information about Marriage Allowance on the Gov.uk website.
- N: means you have transferred 10% of your personal allowance to your husband wife or civil partner under the Marriage Allowance rules.
- NT: means you are not paying any tax on this income.
- S: at the start of your tax code tells your employer or pension provider to take off tax based on the tax bands that apply in Scotland.
- T: this means that your tax code includes other calculations to work out your personal allowance. For example, this could be because your estimated annual income is more than £100,000. Your personal allowance is reduced by £1 for every £2 you earn over £100,000.
- OT: this shows that your personal allowance has been used up, or you’ve started a new job and your new employer didn’t have the details to give you a tax code.
There’s a full list of tax code letters on the Gov.uk website.
The emergency tax code
If your tax code has W1, M1 or X at the end, then you’re being taxed using the emergency tax rate. These are temporary codes that HMRC uses usually when it doesn’t have your income details after a change in circumstances. This could include when you start a new job or first take a taxable lump sum out of your pension.
Other reasons why you may be put onto the emergency tax code include:
- You started a new job and HMRC did not receive your income details
- You have more than one job
- Your employer applied the wrong tax code
- You started a job after being self-employed
- Your pension provider used the wrong tax code
- The amount of State Pension in your tax code was wrong
- You had more than one source of income, such as an extra pension.
If you’re taking out a taxable lump sum, then under the emergency tax rate, HMRC assumes that you will take out the same amount every month, even though in many cases it will actually be a one-off payment.
If you’re on the emergency tax code your employer or pension provider may take off more tax than you expect. You can use the online tool on the Gov.uk website to check how to claim a tax refund. If you don’t claim a refund, your tax code will be adjusted once HMRC has the correct information.
How to change your tax code
If you think your tax code is wrong, then HMRC has an online service on the Gov.uk website which allows you to check if you are paying the right amount of tax. You will need to sign up for a ‘Government Gateway’ account to use this service. There’s information on the Gov.uk website on how to set up a Government Gateway account.
You can use this online service to:
- update your employment details
- tell HMRC about a change in income that may have affected your tax code
For example, you can:
- add company benefits
- add missing employers or income
- claim employment expenses
- update your estimated taxable income
HMRC may change your tax code as a result of the updates you make using the online service.
There are other ways to contact HMRC (including via X or online chat). You can find them at Income Tax: general enquiries - GOV.UK or you can ring HMRC on 0300 200 3300.