Tax Code 2026/27 Explained: What 1257L Means for Your Pay

Your tax code 2026/27 determines exactly how much income tax your employer deducts from your wages. The 2026/27 tax year runs from 6th April 2026 to 5th April 2027.

For most UK taxpayers, the standard tax code is 1257L—but what does this actually mean, and how do you know if yours is correct?

An incorrect tax code could result in you paying too much or too little tax throughout the year.

In this guide, we break down everything you need to know about UK tax codes for 2026 2027, explain how 1257L works, and help you identify whether you might be entitled to reclaim overpaid tax.

What Is a Tax Code?

A tax code is a combination of numbers and letters that tells your employer how much tax-free income you’re entitled to and how to calculate your tax deductions.

HMRC issues your tax code based on information they hold about your income, benefits, and any adjustments from previous years.

Your tax code appears on your payslip, P45, P60, and in your Personal Tax Account on GOV.UK.

Understanding what it means could help you spot errors before they cost you money.

What Does 1257L Mean?

The standard tax code for the 2026/27 tax year (6th April 2026 to 5th April 2027) is 1257L.

Here’s what each part represents:

• 1257: This number multiplied by 10 gives your tax-free allowance. So 1257 means you can earn £12,570 before paying income tax
• L: This letter indicates you’re entitled to the standard tax-free personal allowance

If you have tax code 1257L, your employer should allow you to earn £12,570 across the tax year without deducting income tax.

Any earnings above this amount are then taxed at the applicable rates:

• Personal Allowance: Up to £12,570 at 0%
• Basic Rate: £12,571 to £50,270 at 20%
• Higher Rate: £50,271 to £125,140 at 40%
• Additional Rate: Over £125,140 at 45%

Note: Scottish taxpayers have different income tax rates set by the Scottish Parliament, though the tax code system works similarly.

26/27 Tax Year Common Tax Code Letters Explained

While 1257L is the most common tax code, you might see different letters depending on your circumstances:

• L: Standard personal allowance applies
• M: You’ve received a Marriage Allowance transfer from your spouse or civil partner
• N: You’ve transferred some of your personal allowance to your spouse or civil partner
• T: Your tax code includes other calculations to work out your personal allowance
• 0T: Your personal allowance has been used up or you’ve started a new job without a P45
• BR: All income from this source is taxed at basic rate (20%)
• D0: All income from this source is taxed at higher rate (40%)
• D1: All income from this source is taxed at additional rate (45%)
• NT: No tax is deducted from this income
• S: Scottish rate of income tax applies (e.g., S1257L)
• C: Welsh rate of income tax applies (e.g., C1257L)
• K: You have income that isn’t being taxed another way and it’s worth more than your tax-free allowance
• W1 or M1: Emergency tax code—your tax is calculated on a week-by-week or month-by-month basis

How Your 2026/27 Tax Code Is Calculated

HMRC calculates your tax code by starting with your personal allowance and then making adjustments based on your circumstances.

Factors that could affect your tax code include:

• Untaxed income from a previous year
• Company benefits (such as a company car or private medical insurance)
• State Pension income
• Income from a second job or pension
• Outstanding tax owed to HMRC
• Allowances you’re entitled to claim

Example Tax Code Calculation

Consider James, who has the standard personal allowance but also receives a company car benefit worth £3,000:

• Standard personal allowance: £12,570
• Minus company car benefit: £3,000
• Adjusted tax-free amount: £9,570
• Tax code: 957L

This means James can earn £9,570 tax-free, with the remaining £3,000 of his allowance effectively used to account for his taxable benefit.

Signs Your Tax Code Might Be Wrong

An incorrect tax code could mean you’re paying too much or too little tax. Watch out for these warning signs:

• Your tax code has changed unexpectedly without any change in your circumstances
• You’ve started a new job and been placed on an emergency tax code (W1, M1, or 0T)
• You have multiple jobs but your personal allowance isn’t being split correctly
• You’re receiving the state pension plus employment income
• Your payslip shows significantly more or less tax than you expected
• You’ve received a P800 tax calculation showing you’ve overpaid or underpaid
• Benefits you no longer receive are still being accounted for in your code

Common Coding Errors

Some of the most frequent tax code mistakes include:

• Emergency tax codes persisting: If you started a job without a P45, you may have been placed on emergency tax. This should be corrected once HMRC receives your details, but sometimes it isn’t
• Old benefits still included: Company benefits from previous employers may still be reducing your tax-free allowance
• Marriage Allowance not applied: If you’re eligible but haven’t claimed, you could be missing out on up to £252 per year
• Multiple employments: Your personal allowance might be split incorrectly between jobs, or applied twice, or not applied at all
• Incorrect pension adjustments: State Pension income may not be correctly accounted for in your code

What to Do If Your Tax Code Is Wrong

If you believe your tax code is incorrect, taking prompt action could help you avoid over or underpaying tax:

Step 1: Check Your Tax Code

Log into your Personal Tax Account on GOV.UK to view your current tax code and how it’s been calculated. You can also find your tax code on your payslip or P60.

Step 2: Gather Your Information

Collect relevant documents including:

• Recent payslips
• P60 from your employer
• P45 from any previous employment
• Details of any benefits or allowances
• Information about other income sources

Step 3: Contact HMRC or Seek Help

You can contact HMRC directly to query your tax code, or use a tax rebate service to check whether you’ve overpaid and help you claim back what you’re owed.

Tax Code Errors That Lead to Overpayment

When your tax code is wrong, you could pay more tax than necessary with every payslip. Here are the specific code-related errors that most commonly result in overpayment.

Emergency Codes That Persist

Emergency tax codes (W1, M1, 0T) should be temporary—but sometimes they stick. If HMRC doesn’t receive your details promptly or your employer doesn’t update your code, you could remain on emergency tax for months. This typically results in:

• No personal allowance being applied (0T codes)
• Tax calculated without accounting for previous months’ allowances
• Significantly higher deductions than you should pay

If you’ve been on an emergency code for more than a few pay periods, you may have overpaid.

Outdated Benefits Still in Your Code

When you leave a job with company benefits, those benefits should stop affecting your tax code. However, HMRC sometimes doesn’t receive updated information, leaving old adjustments in place. Common examples include:

• Company car benefits from a previous employer
• Private medical insurance you no longer receive
• Other taxable perks that ended when you changed jobs

Each £1,000 of phantom benefits in your code could cost you £200-£400 in unnecessary tax annually.

Wrong Letter Codes Applied

The letter in your tax code determines how your allowances are calculated. Errors occur when:

• You receive BR (basic rate on everything) instead of 1257L
• A D0 code (higher rate) is applied when you should have allowances
• The S or C prefix for Scottish/Welsh rates is missing or incorrectly added
• An L code is applied when you’re entitled to additional allowances (M or N)

Incorrect Allowance Splits

If you have multiple jobs or receive a pension alongside employment, your personal allowance must be divided between income sources. Problems arise when:

• Your allowance is allocated entirely to a secondary, lower-paid job
• The split doesn’t reflect your actual earnings pattern
• Changes to your income aren’t reflected in updated codes

Adjustments for Debt That’s Been Repaid

If you previously owed tax, HMRC may have adjusted your code to collect the debt gradually. Once repaid, this adjustment should be removed—but sometimes it isn’t, meaning you continue paying extra unnecessarily.

How Far Back Can You Claim?

HMRC typically allows claims for overpaid tax going back four complete tax years.

During the 2026/27 tax year, you could potentially claim for:

• 2022/23 tax year
• 2023/24 tax year
• 2024/25 tax year
• 2025/26 tax year
• 2026/27 tax year (current)

Even small monthly overpayments can add up to a significant refund over several years.

Emergency Tax Codes Explained

Emergency tax codes are temporary codes used when HMRC doesn’t have enough information about your tax situation. The most common emergency codes are:

• 1257L W1: Week 1 basis—your tax is calculated as if it’s the first week of the tax year
• 1257L M1: Month 1 basis—your tax is calculated as if it’s the first month of the tax year
• 0T W1 or 0T M1: No personal allowance applied, calculated on a week or month basis
• BR: All earnings taxed at 20% with no personal allowance

Emergency tax codes often result in overpaid tax because they don’t account for your full year’s allowance. If you’ve been on emergency tax, you may be owed a refund.

Checking Your Tax Code for 2026/27

To ensure your tax code 2026/27 is correct, consider these steps:

• Review your coding notice: HMRC sends a P2 coding notice or online notification when your tax code changes. Check this carefully for accuracy
• Compare with previous years: If your circumstances haven’t changed, your code should be similar to last year
• Verify your allowances: Make sure you’re receiving all the allowances you’re entitled to
• Check for old adjustments: Ensure benefits or debts from previous years aren’t still affecting your code
• Use your Personal Tax Account: GOV.UK provides a breakdown of how your code is calculated

Key Takeaways

• The 2026/27 tax year runs from 6th April 2026 to 5th April 2027
• The standard tax code for 2026/27 is 1257L, representing £12,570 tax-free income
• Tax codes are made up of numbers (your allowance divided by 10) and letters (your circumstances)
• Common errors include emergency tax codes, outdated benefits, and incorrect allowance splits
• You can check your tax code on your payslip, P60, or Personal Tax Account
• Claims for overpaid tax can typically go back four years
• If you’ve been on the wrong tax code, you could be owed a refund

FAQs 2026/27 Tax Codes

FAQ 1: Q: What is the standard tax code for 2026/27? A: The standard tax code for 2026/27 (running from 6th April 2026 to 5th April 2027) is 1257L. The numbers 1257 represent your tax-free personal allowance of £12,570 (multiply by 10), and the letter L indicates you’re entitled to the standard personal allowance.

FAQ 2: Q: What does the L mean in my tax code? A: The letter L in your tax code indicates you’re entitled to the standard tax-free personal allowance. For the 2026/27 tax year, tax code 1257L means you can earn £12,570 before paying income tax.

FAQ 3: Q: How do I know if my tax code is wrong? A: Signs your tax code may be wrong include unexpected changes without changes to your circumstances, being on an emergency code (W1, M1, or 0T), paying significantly more tax than expected, or having old benefits still listed. Check your code on GOV.UK or your payslip.

FAQ 4: Q: Can I claim back tax if I had the wrong tax code? A: Yes, if you’ve paid too much tax due to an incorrect tax code, you can typically claim a refund. HMRC allows claims going back four complete tax years, so during 2026/27 you could claim for tax years from 2022/23 onwards.

FAQ 5: Q: What is an emergency tax code? A: An emergency tax code (such as 1257L W1, 1257L M1, or 0T) is a temporary code used when HMRC lacks information about your tax situation. These codes often result in overpaid tax because they calculate your liability on a week-by-week or month-by-month basis rather than annually.