UK Tax Codes Explained

Your tax code is used by yourย employer or pension provider to work out how much Income Tax to take from your pay or pension. ย As an employed person you should understand and check your income tax code.


The most common tax code people use in the tax years 2021/22 tax year is 1257L and they always start with numbers and end with a letter. HMRCย will usually contact you to explain how they worked out your individual tax code if your tax code changes.

Your tax code can change if there is a change in your tax-free income. For example:-

  • Claiming expenses that you get tax relief on
  • Taxable state benefits
  • Claiming marriage allowance
  • Telling HMRC you have started or stopped receiving benefits from your job
  • Additional income from another job or pension


The standard tax code letters are:

  • L: Youโ€™re entitled to the standard tax-free Personal Allowance (ยฃ12,570 for 2021/22)
  • M: This is for an employee whose spouse or civil partner has transferred 10 per cent of their personal allowance
  • N: Youโ€™ve transferred 10% of your Personal Allowance to your partner
  • T: This signals that you need to review some items with the employer
  • 0T: Your Personal Allowance has been used or youโ€™ve started a new job and your employer doesnโ€™t have the details they need
  • BR: All income from this job is taxed at the basic rate of Income Tax (20%)
  • D0: All income from this job is taxed at the higher rate of Income Tax (40%)
  • D1: All income from this job is taxed at the additional rate of Income Tax (45%)
  • NT: Youโ€™re not paying any tax on this income
  • S: Your tax is based on rates in Scotland
  • C: Your tax is based on rates in Wales

Emergency tax codes are:

If youโ€™ve been placed on emergency tax by your employer, your tax code will in most cases be one of the following:

1257L W1

1257L M1

1257L X

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