The short version: Your tax code tells your employer how much tax to deduct from your pay. It’s based on your Personal Allowance and any adjustments for things like benefits, untaxed income, or underpaid tax from previous years.
What does it look like?
Usually a number followed by a letter. The most common is 1257L, which reflects the standard Personal Allowance. Different letters mean different things, like whether you’re entitled to the full allowance, a reduced amount, or none at all.
What if it’s wrong?
You’ll pay the wrong amount of tax. Too high a code means underpaying (you’ll owe money later). Too low means overpaying (you’ll get a refund, but your cash flow suffers now). Check your code on your payslip or through your Personal Tax Account.
How do you fix it?
Contact HMRC if you think your code is wrong. They can adjust it and your employer will apply the new code going forward.
Confused by your tax code? We can help you understand what it means.
