Understanding Your Tax Code (2025/26 Edition)

Your tax code is one of the most important pieces of information on your payslip, but many people don't understand what it means. This guide will explain everything you need to know about UK tax codes for 2025/26 and how to use our tax calculator to verify your deductions.

What is a Tax Code?

A tax code is a combination of letters and numbers that tells your employer how much tax to deduct from your salary. It's calculated by HMRC based on your personal circumstances and determines your tax-free allowance.

How Tax Codes Work

Your tax code consists of:

• Numbers - Represent your tax-free allowance divided by 10
• Letters - Indicate special circumstances or restrictions

Common Tax Codes for 2025/26

1257L - Standard Tax Code

This is the most common tax code for 2025/26:

• 1257 = £12,570 tax-free allowance (divided by 10)
• L = Standard personal allowance

This means you can earn £12,570 tax-free before paying income tax.

BR - Basic Rate

BR means "Basic Rate" and indicates:

• No personal allowance is available
• All income is taxed at the basic rate (20%)
• Common for second jobs or when personal allowance is used elsewhere

D0 - Higher Rate

D0 means "Direct 0" and indicates:

• No personal allowance is available
• All income is taxed at the higher rate (40%)
• Used for high earners or when personal allowance is fully used

D1 - Additional Rate

D1 means "Direct 1" and indicates:

• No personal allowance is available
• All income is taxed at the additional rate (45%)
• Used for very high earners

NT - No Tax

NT means "No Tax" and indicates:

• No tax should be deducted
• Common for non-UK residents or those with special circumstances

0T (or OT) – No Personal Allowance

• HMRC uses this when your personal allowance is used up, or your employer doesn’t have enough information (e.g. no P45).
• All income is taxed using the standard tax bands (basic, higher, additional).

Emergency Tax Codes

Emergency tax codes are used when HMRC doesn't have enough information about your tax situation:

W1/M1 - Week 1/Month 1

These suffixes indicate that tax is calculated on a cumulative basis:

• W1 = Week 1 basis (weekly pay)
• M1 = Month 1 basis (monthly pay)
• X = When pay period is not weekly or monthly (varies)

This means your tax is calculated only on that week/month's pay, not cumulatively for the year.

How to Find Your Tax Code

You can find your tax code in several places:

1. Your payslip - Usually shown prominently
2. P60 form - Annual tax summary from your employer
3. P45 form - When you leave a job
4. HMRC online account - Through your Personal Tax Account
5. Tax code notice - Letter from HMRC (P2 form)

What Affects Your Tax Code?

Several factors can change your tax code:

Income Changes

• Salary increases or decreases
• Starting or leaving a job
• Receiving benefits in kind
• Overtime or bonuses

Personal Circumstances

• Marriage allowance claims
• Blind person's allowance
• Age-related allowances
• Disability benefits

Other Income

• State pension
• Investment income
• Rental income
• Self-employment income

Checking Your Tax Code is Correct

You can verify your tax code using our UK tax calculator:

1. Enter your gross salary
2. Select your region
3. Compare the calculated tax with your payslip
4. If there's a significant difference, check with HMRC

Common Tax Code Problems

Wrong Tax Code

If your tax code is wrong, you might be:

• Overpaying tax - You'll get a refund
• Underpaying tax - You'll owe money to HMRC

Emergency Tax Code

If you're on an emergency tax code:

• You might be paying too much tax
• Contact HMRC to get your correct tax code
• Provide your P45 or starter checklist

How to Change Your Tax Code

If you think your tax code is wrong:

1. Check your Personal Tax Account on GOV.UK
2. Contact HMRC by phone or online
3. Provide evidence of your circumstances
4. Wait for confirmation of any changes

Tax Codes for Different Situations

Multiple Jobs

If you have multiple jobs:

• Your personal allowance is usually applied to your main job
• Secondary jobs often use BR (Basic Rate) or D0 (Higher Rate)
• Use our calculator for each job separately

Pension Income

For pension income:

• State pension affects your tax code
• Private pensions may have different tax codes
• Check if you're receiving the correct allowances

Benefits in Kind

Company benefits can affect your tax code:

• Company car
• Private medical insurance
• Interest-free loans
• These reduce your tax-free allowance

Scotland-Specific Tax Codes

Scotland has different tax rates, so you might see:

• S prefix - Indicates Scottish taxpayer
• Different rates - Scotland has more tax bands
• Different allowances - Slightly higher personal allowance

Frequently Asked Questions

Why has my tax code changed?

Your tax code can change due to income changes, new benefits, or corrections by HMRC. Check your Personal Tax Account for details.

What if I don't understand my tax code?

Use our tax calculator to see how your tax code affects your take-home pay, or contact HMRC for clarification.

Can I change my tax code myself?

No, only HMRC can change your tax code. You can request changes by contacting them with evidence of your circumstances.

What happens if I'm on the wrong tax code?

If you're on the wrong tax code, you'll either overpay or underpay tax. HMRC will usually correct this automatically, but you can contact them to speed up the process.

Do I need to do anything when I get a new tax code?

Usually no - your employer will automatically apply the new tax code. However, you should check your payslip to ensure the change is correct.