Taxes can be a complicated subject, and your UK tax code can be particularly tricky. However, it’s important to have a basic understanding of your tax code and what it means, as they can significantly impact the amount of tax you pay. In this blog post, we’ll provide a comprehensive guide to the tax code in UK including common categories such as the tax code 1257L, the tax code BR, and the tax code 0T.
What are tax codes and what is a common tax code in UK?
A tax code is a combination of letters and numbers that HM Revenue and Customs (HMRC) use to calculate how much income tax should be deducted from your salary or pension. Tax codes are based on your personal allowance, which is the amount of money you can earn each year before you start paying income tax.
Tax codes affect how much tax you pay, so it’s important to make sure they’re correct. If your tax code is wrong, you may end up paying too much or too little tax. If you’re paying too much tax, you may be able to claim a refund, but if you’re paying too little tax, you’ll need to pay the extra amount.
The most common tax code in the UK is 1257L.
What is the tax code 1257L?
This is the most common tax code in UK. The first part of the code, 1257, represents your tax-free personal allowance, which is currently £12,570. The letter at the end of the code, L, represents your tax status, and means that you have a tax-free personal allowance and income above that is taxed at the basic rate of 20%.
This is used for most individuals, who have only one job or pension as their form of income.
What is the tax code BR?
BR is a tax code which means that you pay tax on all of your income from that particular job. You will usually encounter this code when you have more than one job or pension.
Another common tax code is D0. This tax code means that you’re a higher rate taxpayer, and all of your income is taxed at the higher rate of 40%. You don’t get a tax-free personal allowance with this tax code.
What does a tax code with T mean?
A tax code with T in it usually means that other calculations are needed to work out your tax-free personal allowance. It may also mean that you have used up your personal allowance, such as in the codes S0T or C0T.
What is the tax code 0t?
This code means that your tax-free personal allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code.
In the first case, your income will now be taxed as you have gone over your tax-free allowance. For most people seeing this code, the tax will be at the basic rate of 20%.
In the second case, you will have to give your employer the P45 form from your previous job, or fill out a starter checklist. The starter checklist is a standard form made available by HMRC for employers to work out your correct tax code.
What are the current tax codes in the UK?
Below is the full list of tax codes and their meanings:
| L | You’re entitled to the standard tax-free Personal Allowance. |
| M | Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance. |
| N | Marriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner. |
| T | Your tax code includes other calculations to work out your Personal Allowance. |
| 0T | Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code. |
| BR | All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension). |
| D0 | All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension). |
| D1 | All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension). |
| NT | You’re not paying any tax on this income. |
| S | Your income or pension is taxed using the rates in Scotland. |
| S0T | Your Personal Allowance (Scotland) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code. |
| SBR | All your income from this job or pension is taxed at the basic rate in Scotland (usually used if you’ve got more than one job or pension). |
| SD0 | All your income from this job or pension is taxed at the intermediate rate in Scotland (usually used if you’ve got more than one job or pension). |
| SD1 | All your income from this job or pension is taxed at the higher rate in Scotland (usually used if you’ve got more than one job or pension). |
| SD2 | All your income from this job or pension is taxed at the top rate in Scotland (usually used if you’ve got more than one job or pension). |
| C | Your income or pension is taxed using the rates in Wales. |
| C0T | Your Personal Allowance (Wales) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code. |
| CBR | All your income from this job or pension is taxed at the basic rate in Wales (usually used if you’ve got more than one job or pension). |
| CD0 | All your income from this job or pension is taxed at the higher rate in Wales (usually used if you’ve got more than one job or pension). |
| CD1 | All your income from this job or pension is taxed at the additional rate in Wales (usually used if you’ve got more than one job or pension). |
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What if my tax code starts with ‘k’?
Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance.
For most people, this happens when you’re:
- Paying tax you owe from a previous year through your wages or pension.
- Getting benefits you need to pay tax on – these can be state benefits or company benefits, which you may declare using a P11D form.
- Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension – even if another organisation is paying the untaxed income to you.
Note that employers and pension providers cannot take more than half your pre-tax wages or pension when using a K tax code.
Emergency Tax Codes
‘W1’, ‘M1’ and ‘X’ are known as emergency tax codes. They mean that you’ll pay tax on all your income above the basic Personal Allowance.
You may be put on an emergency tax code if HMRC does not get your income details in time after a change in circumstances such as:
- a new job
- working for an employer after being self-employed
- getting company benefits or the State Pension
Emergency tax codes are temporary. HMRC will usually update your tax code when you or your employer give them your correct details. If your change in circumstances means you have not paid the right amount of tax, you’ll stay on the emergency tax code until you’ve paid the correct tax for the year.
Where Do I Find My Tax Code?
When Does My Tax Code Change?
Your tax code can change for several reasons, including changes to your personal circumstances, such as getting married or starting a new job. It can also change if you receive benefits in kind from your employer, such as a company car or private healthcare. HMRC will notify you of any changes to your tax code, and you should check that it’s correct.
What if your tax code is wrong?
If your tax code is wrong, you may end up paying too much or too little tax. If you suspect that your tax code is incorrect, you should check it against your most recent payslip or P60 to see if the correct code has been applied. You can also check your tax code online using HMRC’s online services.
If you find that your tax code is wrong, you should contact HMRC as soon as possible to correct it. You can do this by calling the tax helpline or using the online services. You may need to provide additional information or evidence to support your claim, such as a P45 or P60.
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