How to read a UK PAYE tax code: what the number and the letters mean

A PAYE tax code tells an employer how much tax-free pay to give an employee before deducting Income Tax. It is built from a number and a letter, and once you can read the two parts the code stops being mysterious. The official decoder is gov.uk's Tax codes guide^[1]; the visual above works the most common one — 1257L — through field by field.

The number is the tax-free amount divided by ten. 1257 means £12,570 of tax-free Personal Allowance for the year, spread evenly across pay periods. The letter describes the situation. L is the standard tax-free Personal Allowance. M and N are the Marriage Allowance^[3] codes, which transfer £1,260 of the Personal Allowance between spouses for 2026/27: M means you have received 10% of a spouse's allowance, N means you have transferred 10% of yours away. The full letter-by-letter reference is in the companion article What Does My UK Tax Code Mean?.

Several codes override the allowance entirely. BR taxes all income from that source at the basic rate (20%); D0 taxes it all at the higher rate (40%); D1 taxes it all at the additional rate (45%). These usually appear on a second job or a pension, where the allowance is already used by the main income. A K code is the inverse: it means untaxed income or taxable benefits (a company car, unpaid tax from a previous year) exceed the allowance, so the excess is added to taxable pay rather than deducted — a K code increases the tax taken. 0T means no allowance is available and each tax band is applied in turn.

Two further signals matter. A prefix S (Scotland) or C (Wales, Cymru) means the devolved Income Tax rates apply — Scottish bands in particular differ from the rest of the UK, so the same salary produces a different deduction. And W1, M1, or X mark an emergency, non-cumulative code: tax is worked out on that pay period alone, ignoring what has already been earned and taxed in the year. Emergency codes are common when starting a job without a P45 and are usually corrected once HMRC has full details. If a code looks wrong, the figures to check are the number (does it match your real allowance?) and the letter (does it match your situation?) against the gov.uk Tax codes^[1] reference.