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Tax codes explained

Your tax code tells your employer how to calculate tax on your pay. Check it when your job, benefits or other income change, because it may no longer reflect your circumstances.

The number

Multiply the digits by ten. 1257L is £12,570.00 of allowance, the standard personal allowance for 2026/27. 1383M is £13,830, which is the standard allowance plus the £1,260 marriage allowance transferred from a spouse. 1131N is the giver's side of that transfer. A larger number usually means job expenses or a professional subscription has been coded in. A smaller number means something is being clawed back: an underpayment from an earlier year, a company benefit, or untaxed income such as rent.

Payroll gives one extra step. HMRC's tables add £9 to every code, so 1257L gives £12,579 of free pay across the year rather than £12,570. That is why a payslip can be up to £3.60 a year kinder than the annual sum, and why this site's figures are the annual sum, not the payslip.

K codes

When the deductions exceed the allowance the code flips to a K. K475 does not give an allowance of £4,750; it adds £4,759 to taxable pay, the ten-times rule plus nine. The extra tax on a K code cannot take more than half of the pay in any period.

The letters

LStandard allowance
M, NMarriage allowance received, or given
TSomething in the code needs a review, often the taper above £100,000
BREverything at the basic rate, no allowance. Usual on a second job.
D0, D1Everything at the higher rate, or the additional rate
0TNo allowance, but the full band table. Not the same as BR once you pass the basic rate band.
NTNo tax
S, C prefixScottish or Welsh rates on the whole of your pay
W1, M1, XEmergency basis. Each pay period is taxed on its own, with no year to date.

The Scottish flat codes count from the basic rate, not the first band. SBR is 20%, SD0 is 21%, SD1 is 42%, SD2 is 45% and SD3 is 48%. Type any code into the calculator to see what it does to your pay.

Your own figures

The example below uses a K code. Open Tax code to enter the one on your payslip.

Your salary before tax, National Insurance and pension payments are taken off.
IncomeDividends from your own company or from shares outside an ISA are taxed on top of your pay.

£2,287 a month in your pocket

£27,442 a year. You keep 69% of £40,000.

Where your income goesYou keep: £27,442 a year, 68.6%. Income tax: £10,364 a year, 25.9%. National Insurance: £2,194 a year, 5.5%.

Of £40,000 a year

Annual amounts, using 2026/27 rates. Pension excludes employer payments and provider tax relief.

Where you live

Scotland sets its own income tax bands; Wales and Northern Ireland match England.

Anything else?

Tax codeK475 · NI letter A · 2026/27
On your payslip; it sets how much pay is tax free.

On your payslip. 1257L is the standard code. What the codes mean.

Only change this if your payslip shows a different letter.
Runs from 6 April to 5 April; pick the year the pay belongs to.

The full breakdown

YearMonthWeek
Pay£40,000.00£3,333.33£769.23
Income tax-£10,363.60-£863.63-£199.30
National Insurance-£2,194.40-£182.87-£42.20
In your pocket£27,442.00£2,286.83£527.73
Payroll deduction rate
31.4%
Personal allowance
£0.00
Employer National Insurance
£5,250.00
Cost to your employer
£45,250.00
Income tax on your pay by band
BandAmountRateTax
basic rate£37,700.0020%£7,540.00
higher rate£7,059.0040%£2,823.60
Totals£40,000.0025.91%£10,363.60

The total rate is income tax divided by gross annual income. It excludes National Insurance and pension deductions.