UK Tax Codes Explained: What they mean and how to spot errors

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By Emma Lunn | Published - 17 Feb 2026

Important info

This article is for general guidance only and is not financial or professional advice. Any links are for your own information, and do not constitute any form of recommendation by Saga. You should not solely rely on this information to make any decisions, and consider seeking independent professional advice. All figures and information in this article are correct at the time of publishing, but laws, entitlements, tax treatments and allowances may change in the future.

Your tax code is a short string of numbers and letters that tells your employer or pension provider exactly how much tax to take from you.

If it is right, you pay the correct tax. If it is wrong – which happens frequently – you could be losing hundreds of pounds a month. Here is your guide to cracking the code and fixing mistakes.

What’s on this page?

Where to find your tax code
What the numbers mean
What the letters mean
The ‘warning’ codes
Emergency codes
Scottish and Welsh codes
Why is my tax code wrong?
The pension withdrawal trap
How to fix your tax code

Where to find your tax code

If your tax code has changed, you may get a letter from HMRC. These are usually sent out between January and March.

If it hasn’t changed, you don't need to call HMRC to find it. Look at:

Your most recent payslip
A P45 or P60 form
Your pension advice slip
Your online personal tax account on the government website.

Self-employed people who are on PAYE for jobs or pension income can check their tax code by logging into their personal tax account. If you’re solely self-employed, you typically won’t have a tax code. Tax will be calculated through your self-assessment return.

What the numbers mean

The numbers in your code usually represent your tax-free personal allowance.

Example: The code 1257L.
The number 1257 means you can earn £12,570 tax-free this year.
The letter L means you are entitled to the standard tax-free allowance.

Charlene Young explains: “This usually applies to people with one job or receiving one pension. If you see different letters and you don’t have more than one job and/or pension (including the state pension), that could indicate an error.”

What the letters mean

L: You get the standard tax-free allowance (£12,570). Most people have this.
M: You have received 10% of your partner's allowance through the marriage allowance.
N: You have used marriage allowance to transfer 10% of your allowance to your partner.
T: Your tax code includes other calculations to work out your personal allowance – such as if you have income above £100,000 (when the personal allowance begins tapering down).
NT: You are not paying tax on this income (nil rate).

The ‘warning’ codes

BR (basic rate): All your income from this job or pension is taxed at 20%. Common for second jobs or pensions. Warning: Check this isn't being applied to your main income.
D0 (higher rate): All your income from this job or pension is taxed at the higher rate (40%). Warning: Check this isn't being applied to your main income.
D1 (additional rate): All income is taxed at 45%.
K: You have other income that isn't already being taxed (like state pension, savings interest above the personal savings allowance, or company benefits) and that income is above your personal allowance. Tax code K means you pay the extra tax that is due on that income, on the income on which this code is being used.Employers and pension providers cannot take more than half of your pre-tax wages or pension when using a K tax code.
0T: Your personal allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code (for example, if you start a new job without a P45).
M1, NONCUM, W1 or X: Emergency tax codes – more on these below.

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Emergency tax codes

If your code ends in W1, M1, or X, you are on an emergency tax code. This often happens when you start a new job or pension.

If it’s a new job, give your P45 from your previous job to your new employer, which should help them to put you on the right tax code. If you didn’t get a P45, you can ask your old employer.

Samuel Mather-Holgate, independent financial adviser, advises: “Give [HMRC] a call and see if you can do anything to rectify this – they may just need a piece of information. The helpline is actually very good and the operators know their stuff.”

Scottish and Welsh codes

If your tax code starts with S, it means your income or pension is being taxed using Scottish income tax rates:

SBR: basic rate (20%)
SD0: intermediate rate (21%)
SD1: higher rate (42%)
SD2: advanced rate income tax (45%)
SD3: top rate (48%)

If your tax code starts with C, it means your income or pension is being taxed using Welsh income tax rates (these are the same as they are in England). The codes are the same as those used in England (see above), but with a C in front of them. For example:

CBR: Welsh basic rate (20%)
CDO: higher rate for Wales (40%)
CD1: additional rate (45%).

Why is my tax code wrong?

Codes often change when your life changes. Common triggers include:

Changing jobs.
Starting to draw a state pension.
Getting company benefits (like a car or medical insurance).
Claiming marriage allowance.

Charlene Young, pensions and savings expert at AJ Bell, says that errors with tax codes usually happen when your income or personal circumstances have changed. “Updates might not be processed correctly by HMRC, or it might simply not be aware of them.”

Craig Rickman, personal finance expert at Interactive Investor, warns: “This can come as a rather unpleasant shock, especially if there’s less than anticipated and the overpaid tax was earmarked for something.”

The pension withdrawal trap

If you take a flexible lump sum from your pension, HMRC often applies an emergency tax code, assuming you will take that same huge amount every month.

Craig Rickman notes: “You can claim the money back, but it’s an admin headache I’m sure you’d rather avoid. Earlier this year HMRC encouragingly outlined plans to solve at least part of this problem, which came into force from April, but there is more work to be done.”

Read more about the new rules for pension over-taxation.

The hack: The ‘£1 pension trick’

To avoid this shock, some experts suggest taking a small nominal withdrawal (e.g. £100 or even £1) first. This forces HMRC to generate a correct tax code for you. Then, when you take your main lump sum later, the tax should be correct.

Read more about the “£1 pension trick”.

How to fix your tax code

If your code is wrong, don’t wait for HMRC to notice.

Check online: Check your income tax for the current tax year on the government website to see how your tax is being calculated.You can see your estimated income from any jobs and pensions, the tax you can expect to pay for the current tax year, and if your tax code has changed.
Update your details. While you are logged in, you can update details of your income from jobs and pensions, and tell HMRC about any other changes that affect your tax code. If you can’t do this online, you can ring HMRC on 0300 200 3300.
Claim a refund: If you have overpaid on a pension withdrawal, don't wait until April. Fill in form P55 (to reclaim tax on a flexibly accessed pension payment) or P53Z (to reclaim tax on a small pension lump sum) to get your money back within 30 days.