Understand your tax code

Tax

Your tax code determines how much income tax will be taken from your pay or pension. It is determined by HM Revenue and Customs (HMRC) and changes at the start of every tax year (from 6 April). Make sure your tax code is correct using our handy guide below:

Tax codes are usually made up of a series of numbers and a letter.

The number is how much income you can have before you pay tax and is based on the basic Personal Allowance. For tax year 2017/2018 the allowance is £11,500. This figure (divided by 10) will precede the letter in your code. So for the 2017/18 financial year, 1150 will be a common number.

The letter indicates your circumstances and how it affects your tax-free Personal Allowance:

  • L: You are under 65 and eligible for the standard tax-free Personal Allowance 
  • M and N: Marriage Allowance lets married couples transfer 10% (£1,150) of their Personal Allowance to their spouse. To transfer you must have an annual income of £11,500 or less
  • M: You are married, and have received 10% of your spouse's personal allowance
  • N: You are married, and have transferred 10% of your personal allowance to your spouse
  • S: Your income or pension is taxed using the rates in Scotland
  • T: Your annual income is over £100,000 and your personal allowance has been reduced
  • 0T: Your Personal Allowance has been used up, or you've started a new job and don't have a form P45, or you didn’t give your new employer the details they need to give you a tax code
  • BR: You have more than one income or pension, and the additional income from this job or pension is taxed at the basic rate (20%)
  • D0: You are a higher rate tax payer with more than one income or pension, and the additional income from this job or pension is taxed at the higher rate (40%)
  • D1: You are an additional rate tax payer with more than one income or pension, and the additional income from this job or pension is taxed at the additional rate (45%)
  • NT: You do not pay tax
  • K: Your level of untaxed additional income exceeds your Personal Allowance. This could mean you are paying tax you owe from a previous year through your wages or pension, getting State benefits that you need to pay tax on or getting benefits from work, such as a company car

Emergency codes

  • W1 and M1: These emergency codes are issued if HMRC does not have enough information about you to send your employer the correct code. These will be updated when your employer has your P45.
  • W1 (week): You are paid weekly and your tax is based only on what you are paid in the current pay period, not the whole year. 
  • M1 (month) You are paid monthly and your tax is based only on what you are paid in the current pay period, not the whole year.

If you think you are on the wrong tax code, please find out what to do on the Government’s services and information website for advice on next steps: https://www.gov.uk/tax-codes/if-you-think-youve-paid-too-much-tax

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