UK Tax Codes Explained 2026/27: How They Work
Quick answer
HMRC works out your tax code by totalling your tax-free allowances, deducting any untaxed income, and dropping the last digit of the result. The number is your tax-free amount divided by ten; the letter reflects your situation. The standard 2026/27 code is 1257L, giving the full GBP 12,570 Personal Allowance.
Which tax code each situation usually produces (2026/27)
| Your situation | Tax code you usually get |
|---|---|
| One job or pension with the full Personal Allowance | 1257L (GBP 12,570 tax-free) |
| A second job or second pension | BR (all of it taxed at the basic rate, 20%) |
| Your Personal Allowance has been used up elsewhere | 0T (no tax-free allowance on this income) |
| Untaxed benefits or State Pension worth more than your allowance | A K code (the excess is added to your taxable pay) |
| Scottish taxpayer | An S prefix, for example S1257L |
| Welsh taxpayer | A C prefix, for example C1257L |
| New job started without a P45 | Emergency code 1257L W1, M1 or X |
Your tax code is not random: HMRC builds it from a short sum. It starts with the tax-free allowances you are entitled to, deducts any income you have already received without paying tax on it, and removes the last digit of the total to produce the number. A letter is then added for your situation. For someone with one job and the standard GBP 12,570 Personal Allowance, that sum lands on 1257L. The table above maps the common situations to the code each one usually produces, so you can see at a glance why your code looks the way it does.
The same allowance can only be used once, which is why a second job or pension typically gets a BR code with no allowance at all, and why a fully used-up allowance produces 0T. A K code reverses the usual logic: instead of shielding part of your pay, it adds untaxed income (such as the State Pension or company benefits worth more than your allowance) on top of your taxable pay. Where you live changes the prefix rather than the number, with S for Scottish taxpayers and C for Welsh taxpayers. A code can change mid-year for many reasons, from starting a new job to claiming Marriage Allowance, so it is worth checking each new code against your payslip.
For the full list of what every letter and code means, see our list of UK tax codes, and for the M and N codes specifically, our guide to Marriage Allowance in the UK. For a deeper look at the most common code, read what the 1257L tax code means, and if yours looks wrong, the tax code checker walks through how to confirm it.
Frequently asked questions
How is my tax code worked out?
HMRC adds up your tax-free allowances, deducts any income you have not paid tax on (such as company benefits), and drops the last digit of the result to get the number. A letter is then added to reflect your situation. For most people the result is 1257L, the full GBP 12,570 Personal Allowance.
Why did my tax code change?
HMRC updates your code when your circumstances change - starting a new job, getting a second job or pension, claiming Marriage Allowance, starting to receive taxable benefits or the State Pension, or owing tax from a previous year. A change does not always mean a mistake, but it is worth checking against your payslip.
What does the number in my tax code mean?
The number is your tax-free income for the year with the last digit removed. So 1257 means GBP 12,570 of income before tax is deducted. A larger number means more tax-free income; a smaller number means less.
What is the difference between 1257L and BR?
1257L gives you the full GBP 12,570 Personal Allowance against that income. BR gives you no allowance at all and taxes every pound at the basic rate (20%), which is normal for a second job because your allowance is already used on your main job.
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General information, not financial advice. Tax rules and figures can change; check the current position on gov.uk before acting.