What is Tax Code? UK Definition 2026/27
Quick Answer
A code telling your employer how much tax-free pay you get.
Definition of Tax Code
Your tax code tells your employer how much tax to deduct from your pay. The most common code is 1257L, meaning £12,570 tax-free. Letters indicate situations: L (standard), BR (all taxed at basic rate), K (deductions exceed allowances). HMRC issues codes based on your allowances and adjustments.
Tax Code — Key Facts for 2026/27
| Standard code | 1257L |
| Means tax-free | £12,570 |
| Scottish prefix | S |
| Welsh prefix | C |
How Tax Code Works — Example
- 11257L = £12,570 tax-free (standard)
- 21100L = £11,000 tax-free (reduced)
- 3BR = No allowance, all at basic rate
- 4K100 = Deduct £1,000 from allowances
- 5S1257L = Scottish taxpayer, £12,570 free
How Tax Code Affects Your Tax
Wrong tax codes cause over or underpayment of tax. Check your tax code on payslips and P60. If wrong, contact HMRC immediately - you can backdate corrections and get refunds.
Official HMRC Guidance on Tax Code
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Tax codesFrequently Asked Questions about Tax Code
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.