The start of the new financial year on April 6 brings many changes for people in work or claiming benefits and those in retirement. HM Revenue and Customs (HMRC) has started issuing emails to people advising them to check their newly issued tax code for 2025/26. Your tax code is the number that tells your employer or your pension provider how much tax to deduct from your income.
The most common tax code is 1257L, which is currently used for most people who have one job or pension. The UK Government recently announced the Personal Allowance will remain frozen at £12,570 until the start of the 2028/29 financial year – it’s been frozen at this rate since the 2021/22 financial year.
The email from HMRC explains there are four possible reasons that your tax code will change from April.
It states: “Your PAYE Income Tax records have recently changed, which means the amount of tax you pay will change.”
For security reasons, HMRC does not give the full details in the email and urges people to log into their online HMRC account.
Four reasons for a tax code change for 2025/26
HMRC states the four possible reasons for a tax code change because:
- your job changed
- your pay changed
- your company benefits, such as a company car changed
- your pension changed
Checking your tax code
The easiest way to do this is to look at your payslip. One you have a note of your Personal Allowance tax code, you can go to the GOV.UK website and use the online “Check your Income Tax for the current year” service. This tool, which covers the current tax year, can be used to check your tax code and Personal Allowance, and to see if a tax code has changed.
Other options available through this online service include allowing users to see an estimate of how much tax they will pay over the whole tax year. However, the service cannot be used by self-employed workers. The GOV.UK website explains: “You cannot use this service if Self Assessment is the only way you pay Income Tax.”
What the tax code numbers mean
The numbers in an employee’s tax code show how much tax-free income they get in that tax year, this is known as your Personal Allowance. You usually multiply the number in the tax code by 10 to get the total amount of income they can earn before being taxed.
For example, an employee with the tax code 1257L can earn £12,570 before being taxed. If they earn £30,000 per year, taxable income is £17,430 (£30,000 – £12,570).
What the letters mean
Letters in an employee’s tax code refer to their situation and how it affects their Personal Allowance. The full list of tax code letters and what they mean can be found on the UK.Gov website here.
Most commonly used letters:
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L – For an employee entitled to the standard tax-free Personal Allowance
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S – For an employee whose main home is in Scotland
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BR/ SBR – For a second job or pension
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M – For an employee whose spouse or civil partner has transferred some of their Personal Allowance
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N – For an employee who has transferred some of their Personal Allowance to their spouse or civil partner
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T – When HMRC needs to review some items with the employee
If your tax code has ‘W1’, ‘M1’ or ‘X’ at the end
W1 (week 1) and M1 (month 1) are emergency tax codes and appear at the end of an employee’s tax code, for example ‘577L W1’, ‘577L M1’ or ‘577L X’.
If your tax code has a ‘K’ at the beginning
Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance.
For most people, this happens when you’re:
- paying tax you owe from a previous year through your wages or pension
- getting benefits you need to pay tax on – these can be state benefits or company benefits
Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension – even if another organisation is paying the untaxed income to you.