Tax Code Checker

Tax codes might appear as a minor detail on your payslip, but they serve a crucial purpose in determining how much tax you pay.

Using a tax code checker is a great way to make sure your tax code accurately reflects your circumstances, so you only pay the income tax that you need to.

Incorrect codes can lead to paying too much (requiring later refunds) or too little (resulting in unexpected tax bills), so regular checking is advisable.

Checking your tax code can help you work out what your code means and exactly how your tax bill has been calculated.

Remember, while your employer applies your tax code, they don’t create it so queries about its correctness should be directed to the tax office (aka HMRC).

Should you identify any discrepancies or have concerns about your code, you can contact HMRC so they can review your circumstances and make necessary adjustments, potentially saving you from tax complications later in the year.

This guide will walk you through the process of checking your tax code from locating it online,  deciphering what the numbers and letters mean and what action to take if you believe it’s incorrect.

Locating your current tax code – You can have more than one

The first stage of the tax code checking process is to locate your current tax code as issued by HMRC.

The most common place to spot it is on your payslip, where it’s typically displayed alongside your earnings and tax deductions.

If you have more than one form of PAYE income you will be given a tax code for each job or pension.

You can access your tax code through your personal tax account online which is a free digital platform provided by HMRC.

If you are no longer in employment your last tax code also appears on official forms like your P60 end-of-year certificate or your last P45 form issued when you left your last job.

If you have income from a pension, you can find your tax code on a pension advice slip or the P60 given to you by your pension provider at the end of the tax year.

The online tax account service provides a breakdown of how your code was calculated, showing each element that contributed to the final figure.

This transparency is really helpful when checking if all relevant factors have been correctly applied to your tax code.

Pay particular attention to any adjustments for company benefits, additional income, or carried-forward underpayments to ensure they’re accurate.

Tax codes and your personal allowance

In each tax year all individuals begin with the same standard personal allowance, and this forms the basis of their tax code.

The personal allowance figure may be adjusted upward if you’re entitled to additional allowances or downward if your allowance is reduced due to other factors.

Some of the common reasons for your personal allowance to be changed include:

• Whether you have just one job or multiple income sources.
• If you receive taxable benefits.
• If you’re entitled to additional tax free allowances.
• Have underpaid tax in previous years.
• You have rental income.

Once all these factors are considered, the final tax-free amount is divided by ten and combined with the appropriate letter to create your tax code.

This code is then communicated to your employer or pension provider, who uses it to calculate the correct tax deduction from each payment they make to you.

For example, a code of ‘1257L’ would tell you that you receive the standard personal allowance of £12,570 with no special circumstances, while ‘K400’ would indicate that you need to pay tax on an additional £4,000 of notional income due to benefits (for example a company car) or underpaid tax from previous years.

How tax codes are calculated

Tax codes are normally (but not always) made up of a combination of numbers and a letter. Knowing what both components mean together gives you the complete picture of how your tax code is calculated by HMRC.

Tax code numbers:

The numerical portion of your tax code typically represents the amount of tax-free income you’re entitled to receive in the tax year, divided by ten.

For example, if your code contains ‘1257’, this indicates a tax-free allowance of £12,570.

This number directly impacts how much of your income remains untaxed before standard tax rates apply.

Tax code letters:

The alphabetical characters in your code provide additional context about your specific circumstances.

Each letter represents specific circumstances that affect how your tax is calculated, providing a shorthand way for employers to apply the correct deductions.

These letters aren’t random but indicate particular conditions affecting your tax calculation.

For example, ‘L’ signifies entitlement to the standard personal allowance and is probablythe most commonly used code among millions of employees who have no special tax circumstances.

Online tax code calculators:

HMRC offers a free online service (that you have to login to use) to review your personal allowance and tax code for the current tax year.

Money saving expert (MSE) has a different option which lets you compare your current tax code against the most common one for your salary.

List of common tax codes and what they mean

• ‘L’ – The letter L means that you qualify for the complete personal allowance and indicates that tax should be deducted at the basic, higher, or additional rates(s) depending on the amount of income you have earned over the personal allowance.
• ‘W1, M1 or X’ – You are being charged emergency tax. These provisional codes are utilised by HMRC, often when they lack your income information following a shift in your financial situation. This can occur when you commence a new employment or initially withdraw a taxable lump sum from your pension.
• ‘K’ indicates that deductions exceed your allowances – perhaps due to taxable benefits like a company health scheme, state pension, or previous underpayment of tax. In these cases, you effectively have a ‘negative’ Personal Allowance, meaning additional tax must be collected.
• ‘BR’, ‘D0’ is for those with multiple sources of income, codes containing these prefixes often appear on second jobs or pensions where your personal allowance is already used against your main income.
• ‘D1’ indicates that all income from that particular source is taxed at the basic, higher, or additional rate respectively, without any tax-free allowance being applied.
• ‘0T’ – your personal allowance has been used up or reduced to zero.
• ‘NT’ – no income tax to be deducted.
• ‘M’ and ‘N’ relate to the marriage tax allowance, showing either that you’ve received a transfer of 10% of your partner’s personal allowance (M) or that you’ve transferred 10% of yours to your partner (N).
• ‘S’ – your income is taxed using Scottish rates.
• ‘C’ – your income is taxed using Welsh rates.

HMRC publishes a complete and up to date tax code list that describes the meaning of all the letters they use.

What to do if your tax code is wrong

If you are good with using an online route the most efficient approach is to use your personal tax account service, where you can report changes to your circumstances that affect your tax code.

The digital platform allows you to update employment details, notify about new benefits or changes to existing ones, and provide information about additional income sources.

The HMRC helpline offers assistance for tax code queries but be prepared for a wait.

When calling, have your national insurance number and relevant documentation ready to help the advisor understand your situation quickly.

They can explain how your current code was determined and process any necessary changes based on the information you provide.

After reporting an error, your tax code will be recalculated if HMRC agrees with your assessment.

Your employer or pension provider will then receive the updated code to apply to future payments.

If you’ve paid too much tax due to an incorrect code during the current tax year you’ll typically receive a refund either through adjusted tax in subsequent pay periods or as a direct repayment for larger amounts.