What is a tax code?

Your tax code is a short mix of numbers and letters on your payslip, your P60 or a letter from HMRC. It tells your employer or pension provider how much of your pay is tax-free, so they can take the right amount of income tax through PAYE. This guide explains how to read a code and why it might change.

The most common code

For 2026/27, most people with one job or pension have the code 1257L. It is built from the standard Personal Allowance of £12,570, with the last digit dropped, followed by the letter L.

What the numbers mean

The numbers in your tax code tell your employer or pension provider how much tax-free income you get from them in that tax year (GOV.UK: what your tax code means). The number is your tax-free amount with its last digit taken off: in GOV.UK's example, a tax-free amount of £11,000 gives the code 1100L. If you get a benefit from your job or other income, your code can change to take account of it.

What the letters mean

The letter tells your employer about your situation. Some common ones, from GOV.UK:

• L: you are entitled to the standard tax-free Personal Allowance.
• S: your income or pension is taxed using the rates in Scotland.
• C: your income or pension is taxed using the rates in Wales.
• K: you have income that you are not paying tax on which is more than your Personal Allowance.

So a Scottish taxpayer with the standard allowance has the code S1257L, and a Welsh taxpayer has C1257L. Our guide to Scottish income tax explains why the Scottish rates are different.

Emergency tax codes

If your code ends in W1, M1 or X, or says NONCUM, you are on an emergency tax code (GOV.UK). It is often used when you start a new job or your employer does not yet have the right details. You can pay too much or too little tax for a while until it is corrected.

Why your tax code might change

HMRC changes your tax code when you need to pay a different amount of tax. GOV.UK lists reasons including (GOV.UK: why your tax code might change):

• you start a new job;
• you start to get income from an additional job or pension;
• your employer tells HMRC you have started or stopped getting benefits from your job;
• you claim Marriage Allowance, or expenses that you get tax relief on;
• you are paying the High Income Child Benefit Charge through your wages or pension;
• you have been on the wrong tax code and owe tax.

How to check your code

You can find your tax code on your payslip, on a Tax Code Notice letter from HMRC if you get one, in the HMRC app, or by checking your tax code for the current year online, where you need to sign in or create an online account (GOV.UK: tax codes). If you think your code is wrong, tell HMRC, because a wrong code can mean the wrong amount of tax is taken from your pay.

What our calculators assume

Our salary calculators use the standard code for 2026/27: the full Personal Allowance of £12,570, reduced only by the taper above £100,000. If your code is different, your real tax will be different too. See why your payslip differs from a salary calculator.

Reading the code on your payslip

Your tax code is shown on your payslip. It might show just the code, or the code with W1 or M1 after it. Compare it with the standard code for the tax year: if it is different, there is usually a reason, such as a benefit from your job or a second job. If the code ends with W1 or M1, or says X or NONCUM, it is an emergency code, which GOV.UK explains alongside the other letters.

Your code can change during the year. Your employer uses your tax code to work out the tax on your pay, so when the code changes, the tax on your payslip can go up or down without your pay changing. If your tax suddenly changes, the code is the first thing to check.

Tax codes for pensions

Pension providers use tax codes too. If you get a workplace or personal pension, your provider uses your tax code to work out the tax on each payment, in the same way an employer does. If you have a pension and a job, or more than one pension, each payer uses a tax code.

Other reasons on HMRC's list

GOV.UK's list of reasons for a new tax code also includes these (GOV.UK: why your tax code might change):

• you get taxable state benefits;
• the interest on your savings is more than your Personal Savings Allowance;
• your weekly State Pension amount changes;
• you need to pay back the Winter Fuel Payment or Pension Age Winter Heating Payment.

Each of these can change how much tax should be taken from your pay or pension during the year, which is why the code changes.

Common questions

Is a lower number in my tax code bad?

It means less of your pay is tax-free through that job or pension, so more tax is taken. That can be correct, for example if HMRC is collecting tax on a benefit from your job, but check it if you are not sure why.

General information for the 2026/27 tax year, not financial or tax advice. We are not HMRC. Found a mistake? See our corrections policy.