What your tax code means

Tax codes can be complicated, whether you’re an employer managing a payroll or an employee looking to calculate how much tax you’ll pay.

Your tax code is provided by HMRC and defines how much income tax you’ll pay on your salary or pension.

This guide from Brearley & Co’s experts details everything you need to know about tax codes, including finding and changing your tax code.

Where can I find my tax code?

You can find your tax code in several different places.

• On your payslip from your employer
• On a tax code notice letter from HMRC
• On a P45 (the form your employer gives you when you stop working for it)
• On a P60 (the annual summary of your salary and tax deductions, provided by your employer)
• On a pension advice slip
• On the HMRC app
• Through HMRC’s online income tax checker (you’ll need to create a personal tax account to use this)

You can also find the previous year’s tax code through HMRC’s online income tax checker.

What your tax code means

Your tax code is a combination of one letter and either three or four numbers, which is used to show how much income tax you’ll pay on your salary or pension.

Your working situation and how much you earn determines your tax code. You won’t need to pay income tax until you earn over the Personal Allowance figure.

The Personal Allowance figure is £12,570 for the 2025/26 tax year

What do the numbers in your tax code mean?

The numbers in your tax code tell HMRC how much tax-free income you can earn in that year.

Your tax code number is calculated from your tax-free personal allowance and any untaxed income. HMRC will also review benefits from your job like company cars.

1257 is the most common number in a tax code, and signals that you’re entitled to the full Personal Allowance amount before paying tax.

This number may be higher if you’re claiming expenses – like uniforms or accommodation – or lower if you receive any benefits in kind (BiK) from your employer.

What does the letter in your tax code mean?

The letter in your tax code describes your employment status, how much you earn and what the impact of this is on your personal allowance amount.

This is what each of the letters that you may find in your tax code mean:

L – You qualify for the standard tax-free Personal Allowance

M - You’ve received 10% of your partner’s Personal Allowance

N - You’ve transferred 10% of your Personal Allowance to your partner

T - Your Personal Allowance has been worked out using other calculations in your tax code

0T - Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the necessary details to give you a tax code

BR - All your income from this job or pension is taxed at the basic rate. This is 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 – Your entire income from this job or pension is subject to the additional tax rate (typically used when you have multiple jobs or pensions).

NT – No tax is being deducted from this income.

S – Your income or pension is taxed based on Scottish tax rates.

S0T – Your Personal Allowance has been used up in Scotland, or you’ve started a new job and your employer does not have the necessary details to give you a tax code

SBR – All your income from this job or pension is taxed at the basic rate in Scotland. This is 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 advanced rate in Scotland (usually used if you’ve got more than one job or pension)

SD3 – 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 income tax rates in Wales

C0T – Your Personal Allowance has been used up in Wales, or you’ve started a new job and your employer does not have the necessary details to give you a tax code

CBR – All your income from this job or pension is taxed at the basic rate in Wales. This is 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. This is 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. This is usually used if you’ve got more than one job or pension

Why has my tax code changed?

HMRC will usually get in touch with you if your tax code has changed. They will confirm why the change has happened and what your new tax code means.

Your tax code may change for several reasons:

• You start a new job
• You’re getting additional income from another job or pension
• You’ve started or stopped getting benefits from your job and your employer has told HMRC
• You’re claiming a Marriage Allowance (when you’re transferred a portion of your Personal Allowance from your husband, wife, or civil partner)
• You’re claiming expenses that you get tax relief on
• You’re getting taxable state benefits
• Your weekly State Pension amount has changed

How do you change your tax code?

If you’ve recently changed jobs, your new employer should’ve let HMRC know.

You might be put on an emergency tax code if HMRC doesn’t get your details in time.

If you think you have an incorrect tax code, you can check your income tax details online and tell HMRC about changes that affect your tax code.

By logging in, you can see your estimated income from any jobs and pensions, along with the tax you can expect to pay. You can update income details and see if your tax code has changed too.

You can also contact HMRC directly to update your tax code.

What is the emergency tax code?

Emergency tax codes are used temporarily if HMRC doesn’t receive your income details in time after your circumstances change.

This can happen when you:

• Get a new job
• Work for an employer after being self-employed
• Get new company benefits or the State Pension

There are three types of emergency tax codes, which you can identify from the following combinations at the end of your tax code:

• 1257L W1 - used if you’re paid weekly
• 1257L M1 – used if you’re paid monthly
• 1257L X – used if your pay varies

HMRC will update your tax code when you or your employer provides the correct details, usually within 35 days.

If you’ve not paid the correct amount of tax due to your change in circumstances, you’ll stay on the emergency tax code until you’ve paid the right tax for the year.

The emergency tax codes are non-cumulative, which we’ve explained later in this guide.

Can you have two tax codes?

You can have two different tax codes if you work two jobs. You’ll have a tax code for each job on your respective payslips.

You’ll only receive one Personal Allowance, and this should be set against your main income. For example, if you have a primary job which pays more than the Personal Allowance (£12,570 for 2025/26), you’ll likely be on the 1257L tax code.

For your second job, you’ll get one of three tax codes:

• BR (basic rate) - 20% tax on earnings between £12,571 and £50,270
• D0 (higher rate) - 40% tax on earnings between £50,271 and £125,140
• D1 (additional rate) - 45% tax on earnings over £125,140

If your earnings from your second job push your total earnings beyond a higher tax rate threshold, you’ll pay the lower rate on any income below that threshold and the higher rate on the rest.

For example, if you earn £45,000 from your main job and £8,000 from your second job, you’ll pay:

• 20% on everything over £12,570 for your first job
• 20% on the first £5,270 for your second job, 40% on the remaining £2,730

If you don’t earn over the Personal Allowance in your main job, you can apply to split your allowance across jobs – providing your income is fixed and stable.

It’s important to check the tax code for your second job to make sure it’s correct. If 1257L is showing up on both your payslips for your main and second job, you’re getting the full Personal Allowance for both. You’ll end up being hit with a hefty tax bill from HMRC at some point – so contact them to get it changed as soon as possible.

What is the difference between cumulative and non-cumulative tax codes?

There are several key differences between cumulative and non-cumulative tax codes.

What is a cumulative tax code?

Cumulative tax codes are used by most employers and account for income and tax paid from the start of the tax year to the current date - so your entire tax situation is considered before deducting tax.

This means that if you’ve paid too much tax in one month, you will pay less in following months – and vice versa.

1257L is the most common example of a cumulative tax code.

What is a non-cumulative tax code?

Non-cumulative tax codes handle each pay period as a standalone, and don’t account for income or tax paid across previous periods in the tax year.

This means that any unused allowance won’t roll over into future pay periods, so you could end up paying too much tax.

The emergency tax codes – W1, M1, or X – are non-cumulative tax codes.

Need help with your tax?

Even with the help of this guide, tax codes and taxation remain complicated processes, and it can be stressful for employees and employers alike.

Brearley & Co offer a variety of services which relieve you of these burdens, making sure you get the most out of your money and stay compliant.

If you have any queries on tax codes or taxation, get in touch with our friendly team and arrange a free meeting - we’d be happy to help.