A List of Tax Codes and What They Mean

Tax codes can look complicated, but understanding the main letters, numbers and prefixes makes them much easier to manage. There is no fixed list of 20 UK tax codes: HMRC uses different combinations of numbers, letters and regional prefixes depending on an employee’s circumstances.

For business owners, payroll can still become a significant administrative burden, particularly as teams grow or employee circumstances change. If you need help running payroll or simply want to hand it over, our payroll team can manage the process for you.

Payroll shouldn’t depend on guesswork.

Tax codes are only one part of running payroll correctly. Starters, leavers, pensions, statutory payments and changing employee details can all create additional work and potential errors.

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What Are Tax Codes?

In simple terms, a tax code is a combination of numbers and letters used by an employer or pension provider to work out how much Income Tax to deduct through PAYE.

The numbers normally indicate how much tax-free income is allocated to that employment or pension, while the letters provide information about the individual’s circumstances and how their tax should be calculated.

For the 2026/27 tax year, 1257L remains the standard tax code for most people with one job or pension and the standard £12,570 Personal Allowance. Other codes, including BR, 0T, D0 and K codes, may apply depending on the individual’s income, other jobs or pensions, benefits and tax position.

It is worth checking tax codes carefully, as an incorrect code can result in an employee paying too much or too little Income Tax.

List of UK Tax Codes and Their Meanings

There is no single fixed number of UK tax codes because HMRC can combine numbers, letters, regional prefixes and emergency-code markers according to an individual’s circumstances. The following are the codes employers are most likely to encounter.

L

L is the most common tax-code letter and means the individual is entitled to the standard tax-free Personal Allowance.

For the 2026/27 tax year, the standard Personal Allowance remains £12,570, so 1257L continues to be the tax code used for most people with one job or pension.

As a general rule, the number in a tax code is multiplied by 10 to indicate the amount of tax-free income allocated to that employment or pension. The actual code can differ where HMRC has made adjustments for benefits, untaxed income or other circumstances.

The Personal Allowance also starts to reduce once adjusted net income exceeds £100,000 and is normally completely withdrawn at £125,140.

0T

The 0T tax code means no Personal Allowance is being given against income from that employment or pension. Income is therefore taxed from the first pound at the applicable Income Tax rates.

HMRC may use 0T where an individual’s Personal Allowance has already been used up or where an employer does not have sufficient information to apply another tax code.

Importantly, 0T is not automatically an incorrect tax code. If an employee believes their code is wrong, they should check their details with HMRC rather than asking their employer to substitute a different code.

BR

BR stands for basic rate. It means all income from that particular job or pension is taxed at the basic rate, with no Personal Allowance applied to that source.

It is commonly used where someone has more than one job or pension. For example, HMRC may allocate the individual’s Personal Allowance to one employment and use BR for a second source of PAYE income.

A BR code does not mean that the employee loses their Personal Allowance altogether; it usually means the allowance is being used against another source of income.

D0

D0 means all income from that particular job or pension is taxed at the higher rate, with no Personal Allowance applied to that source.

It is commonly used for a second job or pension where HMRC expects the income from that source to fall within the higher-rate band.

For taxpayers in England and Northern Ireland, the higher Income Tax rate is 40% in 2026/27. Welsh taxpayers use the equivalent CD0 code, while Scotland has its own set of rates and codes.

D1

D1 means all income from that particular job or pension is taxed at the additional rate.

For taxpayers in England and Northern Ireland, the additional rate is 45% in 2026/27. D1 is commonly used for a second job or pension where HMRC expects all income from that source to be taxable at the additional rate.

It should not be read simply as confirmation that the employee earns a particular amount from that job. HMRC determines the code by considering the individual’s wider tax position.

Welsh taxpayers use CD1 for the equivalent additional-rate treatment.

M

M relates to Marriage Allowance and appears in the tax code of the spouse or civil partner receiving the benefit of a Personal Allowance transfer.

Marriage Allowance allows an eligible lower-earning spouse or civil partner to transfer £1,260 of their Personal Allowance. This can reduce the recipient’s Income Tax bill by up to £252 per tax year.

In England, Wales and Northern Ireland, the recipient must normally be a basic-rate taxpayer. In Scotland, they must normally pay the starter, basic or intermediate rate.

Marriage Allowance has specific eligibility conditions, so it should not be presented as a general tax-saving option for all couples.

N

N is the Marriage Allowance code used for the person who has transferred £1,260 of their Personal Allowance to their spouse or civil partner.

The transfer can reduce the couple’s overall Income Tax bill by up to £252 a year, provided the Marriage Allowance eligibility conditions are met.

NT

NT means that no Income Tax is deducted from that particular source of PAYE income.

HMRC only uses NT in specific circumstances. These can include certain bankruptcy cases, statutory exemptions and situations where an applicable double-taxation agreement means PAYE should not be deducted.

Being non-UK resident does not automatically entitle someone to an NT tax code. The appropriate treatment depends on the individual’s circumstances and any relevant double-taxation agreement.

C

A C prefix identifies an employee or pension recipient whose income is being taxed using the Welsh Income Tax rates.

For example:

• C0T – no Personal Allowance is applied to that Welsh source of income
• CBR – all income from that job or pension is taxed at the Welsh basic rate
• CD0 – all income from that job or pension is taxed at the Welsh higher rate
• CD1 – all income from that job or pension is taxed at the Welsh additional rate

For 2026/27, the main Welsh Income Tax rates remain aligned with those applying in England and Northern Ireland, but the C prefix is still important for payroll purposes.

S

Here you’ll find SD2, which is Scotland’s 48% tax charge for those earning over £125,140.

An S prefix identifies an employee or pension recipient who is subject to Scottish Income Tax on relevant earnings.

Scotland has more Income Tax bands than the rest of the UK. For 2026/27, assuming the standard Personal Allowance, the Scottish bands are:

• 19% starter rate: £12,571 to £16,537
• 20% basic rate: £16,538 to £29,526
• 21% intermediate rate: £29,527 to £43,662
• 42% higher rate: £43,663 to £75,000
• 45% advanced rate: £75,001 to £125,140
• 48% top rate: over £125,140

The corresponding flat-rate codes commonly used for additional jobs or pensions include:

• SBR – Scottish basic rate
• SD0 – Scottish intermediate rate
• SD1 – Scottish higher rate
• SD2 – Scottish advanced rate
• SD3 – Scottish top rate

So, importantly, SD2 is the 45% advanced-rate code, while SD3 is the 48% top-rate code.

T

A tax code ending in T means the code includes other calculations used to work out the individual’s Personal Allowance. HMRC may use a T code where it needs to review particular items affecting the employee’s tax position.

K

A K code is used where deductions for items such as taxable company benefits, State Pension or tax owed from previous years are greater than the individual’s Personal Allowance.

Unlike a normal tax code, the number following K represents an amount that is added to taxable income when PAYE is calculated. For example, K475 broadly represents £4,750 being added to taxable income for PAYE purposes.

There is also an important payroll safeguard: the Income Tax deducted in a pay period cannot exceed 50% of the employee’s pre-tax pay or pension.

Emergency Tax Codes

Emergency tax codes are often temporary and can be used when HMRC or a new employer does not yet have all the information needed to calculate tax on the normal cumulative basis.

They are not three separate standalone tax codes. An emergency basis is normally shown at the end of another tax code:

• W1 – used where the employee is paid weekly
• M1 – used where the employee is paid monthly
• X – used where pay dates vary
• NONCUM – may appear instead, depending on the payroll software

For 2026/27, 1257L is HMRC’s standard emergency code, although other underlying codes can also be operated on an emergency basis.

When an emergency code is used, Income Tax is calculated using the current week or month rather than taking account of the employee’s cumulative pay and tax for the whole tax year. This can result in too much or too little tax being deducted.

A P45 or correctly completed starter checklist can help a new employer apply the appropriate tax treatment. If an employee believes their tax code remains wrong, they should check and update their details with HMRC.

Final Insights on UK Tax Codes

Understanding the main UK tax codes can make payroll queries easier to resolve, but employers should remember that HMRC determines an employee’s tax code.

When HMRC issues a new code, employers should update the employee’s payroll record as soon as possible and normally before the next payment is made. If an employee believes their tax code is wrong, they should check and update their details with HMRC rather than asking the employer to choose a different code.

For growing businesses, keeping on top of starters, leavers, tax-code notices, pensions, statutory payments and payroll reporting can quickly become an administrative burden. A managed payroll service can remove that workload while helping the business maintain an accurate, consistent PAYE process.

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Or, get a full breakdown of everything involved in paying staff and getting paid as an employee in our

Guide to Payroll.