How tax codes work
Decode 1257L, BR, K codes and what to do if yours looks wrong.
Your tax code looks like a string of numbers and letters, but it’s simply HMRC’s way of telling your employer how much tax-free income you’re entitled to. Understanding it helps you spot mistakes before they cost you money.
How to read a tax code
The number represents your tax-free allowance for the year, divided by 10. So 1257L means you can earn £12,570 tax-free in 2026/27 — the standard personal allowance. The letter tells HMRC and your employer what the figure relates to:
- L — you’re entitled to the standard personal allowance (the most common code)
- T — your code includes other calculations (e.g. pension or benefits), often temporary
- BR — all income taxed at basic rate, no allowance
- D0 — all income taxed at the higher rate
- D1 — all income taxed at the additional rate
- NT — no tax to pay
- K — you owe tax through your pay because your untaxed income or benefits exceed your allowance
- M / N — you’ve transferred 10% of your allowance to or from your partner under Marriage Allowance
Why codes change
HMRC recalculates your code whenever something affects your allowance: starting or leaving a job, receiving company benefits, untaxed interest, a second income, or a previous year’s underpayment. That’s why your code can change partway through a year.
W1 / M1 — the “emergency” basis
If your code includes W1 (week 1) or M1 (month 1), tax is worked out on that single pay period only, with no correction for earlier periods. This is often a temporary measure — for example when you start a new job — and it means you may pay a little extra until HMRC issues a correct code.
When a code is wrong
Because PAYE uses your code to withhold tax, a wrong code means you pay the wrong amount. The most common mistakes:
- Your personal allowance is spread across two jobs when it should only apply to one
- A benefit like a company car isn’t reflected in your code
- HMRC is working off a previous year’s income estimate
If your code looks wrong, use your Personal Tax Account on GOV.UK to tell HMRC, or call them. If you’ve already overpaid, HMRC usually issues a refund through your pay or bank account at the end of the tax year — see our tax refunds guide.
See the impact
Use the salary calculator to see how a different tax code changes your take-home pay, or the income tax calculator for the underlying bands.
Frequently asked questions
What does the 1257L tax code mean?
1257L means your tax-free personal allowance for the year is £12,570 (the number is the allowance divided by 10). L is the standard suffix for someone with just the personal allowance.
What is a BR tax code?
BR means all your income from that source is taxed at the basic rate of 20% with no tax-free allowance. It's often used for a second job or pension, or when HMRC doesn't yet know your full circumstances.
What is a K tax code?
A K code means you have more taxable income than your allowance, so your employer adds extra "income" to your pay to recover the tax — often used when you owe tax or have benefits such as a company car.
Why does my tax code have two numbers like 1257L W1?
W1 or M1 means your tax is calculated on a week 1 (or month 1) basis — each pay period is treated separately with no cumulative adjustment. It prevents tax owed earlier in the year being taken from a later pay packet.
How do I fix a wrong tax code?
Report it to HMRC through your Personal Tax Account on GOV.UK or by phone. If you've overpaid, HMRC will refund you — usually via a PAYE tax calculation at the end of the year. See our tax refunds guide.
Try the calculators
Put the numbers from this guide into practice with our free tools.
This guide is for general information only and is not professional financial, tax or legal advice. UK rates and rules change, so always verify important figures with official GOV.UK / HMRC information or speak to a qualified professional. See our full disclaimer.