Tax Code
A code issued by HMRC to your employer to tell them how much income tax to deduct from your pay each period. The most common code is 1257L, representing the standard Personal Allowance of £12,570 divided by 10 (1257) with the letter L indicating a standard tax-free amount. Your code may be adjusted to reflect benefits in kind, underpaid tax from prior years, Marriage Allowance, or Blind Person's Allowance.
Related Terms
PAYE
Pay As You Earn — the system by which employers deduct income tax and National Insurance directly from employees' wages before paying them, and remit the deductions to HMRC on their behalf.
Personal Allowance
The amount of income you can earn in a tax year before paying income tax, currently £12,570 and frozen until April 2028.
Marriage Allowance
Allows one partner in a marriage or civil partnership to transfer £1,260 of their unused Personal Allowance to the other, reducing the recipient's tax bill by up to £252 per year.
Blind Person's Allowance
An additional tax-free allowance of £3,070 (2025/26) available to registered blind individuals, added on top of the Personal Allowance to reduce taxable income.
P45
A form your employer gives you when you leave a job, showing your tax code, total pay, and total tax paid in the current tax year up to your leaving date.
P60
An annual certificate your employer gives you at the end of the tax year (by 31 May) summarising your total pay and total tax deducted under PAYE for the year.
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Use our free tool to see how tax code affects your tax.