--- title: "UK Tax Codes Explained: 2026/27 PAYE Guide" description: "**Updated for 2026/27.** A PAYE tax code tells an employer or pension provider how much Income Tax to deduct. HMRC builds it from your allowances, estimated income, benefits, previous underpayments and other adjustments. It is not a complete tax calculation,…" url: "https://www.accountingfirms.co.uk/knowledge-bank/what-is-a-tax-code-and-how-is-it-determined/" updated: "2026-08-12" category: Income Tax --- # UK Tax Codes Explained: 2026/27 PAYE Guide **Updated for 2026/27.** A PAYE tax code tells an employer or pension provider how much Income Tax to deduct. HMRC builds it from your allowances, estimated income, benefits, previous underpayments and other adjustments. It is not a complete tax calculation, so an incorrect estimate can produce too much or too little tax. ## How the number is calculated For a standard positive code, HMRC broadly takes the tax-free amount available for that source, divides it by 10 and adds a letter. A code of 1257L usually reflects the £12,570 standard Personal Allowance. The number is only a shorthand: adjustments for benefits, untaxed income or debt can reduce it. ## Common tax code letters - **L:** entitled to the standard Personal Allowance - **M:** receiving 10% of a spouse or civil partner's Personal Allowance through Marriage Allowance - **N:** transferring 10% of the allowance to a spouse or civil partner - **T:** other items need review or HMRC cannot automatically calculate the code in the usual way - **0T:** no Personal Allowance at that source, often because information is missing or allowances are used elsewhere - **BR:** all income from that source taxed at the basic rate - **D0:** all income from that source taxed at the higher rate - **D1:** all income from that source taxed at the additional rate - **NT:** no tax deducted; this should only be used where HMRC authorises it - **K:** deductions exceed allowances, often because of benefits or tax owed Scottish codes begin with S and Welsh codes with C. These prefixes direct payroll to the appropriate regional rates. ## Cumulative and emergency codes A cumulative code considers taxable pay and tax from the start of the tax year, allowing later payrolls to correct earlier deductions. A W1, M1 or X marker calculates the current week or month in isolation. This non-cumulative treatment may be used temporarily when HMRC or the employer lacks complete information. ## Why HMRC changes a code - You start or leave a job or pension - You have multiple jobs or pensions - Estimated annual pay changes - A company benefit starts, stops or changes value - HMRC collects an earlier underpayment - Untaxed interest, property or other income is coded out - Marriage Allowance or another relief changes - Adjusted net income reduces the Personal Allowance above £100,000 ## K codes A K code means the items HMRC is collecting through PAYE exceed your available allowances. Payroll adds the code amount to taxable pay rather than providing tax-free pay. The PAYE deduction resulting from a K code is subject to a statutory limit: it should not take more than 50% of the relevant pre-tax pay for the period. ## Multiple jobs and pensions HMRC usually allocates the Personal Allowance to one source and gives other sources BR, D0, D1 or another code. This can be correct, but problems arise when an old employment remains open, allowances are duplicated or estimated pay is unrealistic. Review all sources together, not one payslip alone. ## Benefits in kind Company cars, private medical insurance and other taxable benefits may reduce the code unless they are payrolled. HMRC often uses an estimated annual benefit. Tell HMRC when a benefit ends or changes; otherwise deductions may continue after the underlying benefit has stopped. ## Tax code example HMRC starts with a £12,570 Personal Allowance and deducts an estimated £2,000 taxable benefit, leaving £10,570. Dividing by 10 produces a code number around 1057, usually with an appropriate letter. The precise code can differ because HMRC uses its coding rules and other adjustments. ## Where to find your code Check your payslip, P45, P60, HMRC tax-code notice, Personal Tax Account or HMRC app. Compare the code across employments and pensions. The online explanation should show the allowances and deductions HMRC used. ## How to correct a code 1. Check that employers, pensions and estimated annual pay are current. 2. Review benefits, untaxed income and underpayment adjustments. 3. Update details through the Personal Tax Account or contact HMRC. 4. Give the employer a P45 or accurate starter declaration where relevant. 5. Check a later payslip to confirm the new code was applied. 6. After the tax year, compare the P60/P45 figures with HMRC's calculation. An employer cannot invent a preferred code; it normally applies the latest HMRC instruction. Ask the employer to correct pay or leaving-date data, and ask HMRC to correct the code itself. ## Does a correct code guarantee the right tax? No. PAYE uses estimates and may not include all savings, dividends, rent, self-employment, capital gains or overseas income. Self Assessment or an end-of-year reconciliation may still be required. Use HMRC's official [tax code guidance](https://www.gov.uk/tax-codes) and [current-year Income Tax service](https://www.gov.uk/check-income-tax-current-year). Our [PAYE guide](https://www.accountingfirms.co.uk/knowledge-bank/what-is-the-pay-as-you-earn-paye-system/) explains how payroll applies the code. ## Frequently asked questions ### Is 1257L always correct? No. It is common for someone with the standard allowance, but benefits, multiple sources, high income or other adjustments can require a different code. ### Does BR mean emergency tax? Not necessarily. BR may be correct for a second income source; it is wrong if it does not reflect your total position. ### Can a code refund tax automatically? A cumulative replacement code can correct some overpayments through payroll, but end-of-year or direct refund procedures may still be needed. *This guide is general information. Use HMRC's live breakdown to check your personal code.*