UK tax codes explained: 1257L, BR, K codes and emergency tax
Quick answer: Your tax code tells your employer or pension provider how much Income Tax to deduct through PAYE.
Your tax code tells your employer or pension provider how much Income Tax to deduct through PAYE. Get the wrong one and you over- or under-pay tax all year. This guide decodes the letters and numbers and shows what to do if your code looks wrong.
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Primary source: https://www.gov.uk/tax-codes
What the numbers and letters actually mean
The number is your Personal Allowance divided by 10. £12,570 → 1257. If HMRC has reduced your allowance for a company car, taxable benefit-in-kind, or untaxed income, the number drops. If they've increased it (rare, but possible for some allowances), it rises.
Common letters: L = standard Personal Allowance; M and N = recipient/giver of Marriage Allowance; T = there are 'other items' HMRC needs to review (often used at very high incomes when the allowance tapers); K = negative allowance, where benefits or untaxed income exceed your tax-free amount.
Scottish taxpayers carry an S prefix (e.g. S1257L), Welsh taxpayers a C prefix (e.g. C1257L). The number works the same way; the rates differ — Scotland has its own bands.
BR, D0, D1 and 0T — when you have more than one income
If you have a main job and a second job (or a pension and a job), HMRC normally gives the full Personal Allowance to one source and applies BR, D0 or D1 to the other so all of its income is taxed at one rate.
BR is the most common second-job code — every penny taxed at 20%. If your second job pushes you into higher-rate territory, D0 (40%) may be applied. 0T is used when HMRC doesn't yet know your details (e.g. when you start a new job without a P45) — it taxes you slice by slice, with no allowance.
If the split makes you overpay (e.g. your main job earns less than the Personal Allowance), you can ask HMRC to split the allowance differently between the two sources.
Emergency tax codes and how they get corrected
Emergency codes (1257L W1, M1 or X) tax each pay period in isolation rather than cumulatively. They are commonly applied when you start a new job without a P45, take pension money for the first time, or move between jobs mid-year.
Because they ignore tax already paid in earlier months, they often over-deduct in the first one or two payslips. Once HMRC receives the right information (usually via PAYE) you'll be moved to a normal cumulative code and any overpayment is refunded automatically in your following pay.
If the emergency code persists for more than a few months, call HMRC on 0300 200 3300 (or log into your Personal Tax Account at gov.uk) to push it along.
Spotting and fixing a wrong code
Check your code against the latest HMRC tax code notice (P2) or your Personal Tax Account. A common cause of a wrong code is an out-of-date company car or benefit-in-kind figure.
If your code is wrong, contact HMRC. Most corrections can be made online via your Personal Tax Account; complex cases may need a phone call. HMRC issues a new tax code notice and sends an instruction to your employer for your next payday.
After the tax year ends, HMRC reconciles your PAYE. If you have overpaid (a P800 letter), the refund is issued by bank transfer or cheque. If you have underpaid by a small amount, it is usually collected through next year's code; larger amounts may need a one-off payment.
Common questions
- Why does my tax code say K475?
- A K code means your taxable benefits or untaxed income exceed your Personal Allowance, so the K number is added (not subtracted) when calculating PAYE. K475 means £4,750 a year is added to your taxable pay before tax is worked out. The maximum extra tax in any pay period is capped at 50% of that period's pay.
- What is the difference between 1257L and 1257L W1?
- 1257L is cumulative — your tax-free allowance is spread evenly across the year, so any earlier under- or over-payment self-corrects. 1257L W1 (or M1 or X) is non-cumulative emergency: each pay period is taxed in isolation. It often results in a temporary overpayment that is refunded once a cumulative code is issued.
- Why is my tax code lower than 1257?
- Common reasons: you have a company car, private medical insurance through work, or other taxable benefits-in-kind that HMRC has deducted from your allowance; you owe tax from a previous year being collected via PAYE; or your income exceeded £100,000 last year (the allowance tapers above that). Check the breakdown on your Personal Tax Account.
- Do students get a different tax code?
- No. Students pay tax in exactly the same way as anyone else. Tax is only due once total earnings in the tax year exceed the Personal Allowance (£12,570). If you only work part of the year and earn under that, any tax deducted by PAYE is refunded automatically at year-end.