Your situation
P2 tax code notice: how to read it
Independent site, not HMRC. Only HMRC can change your code: use your HMRC online account or app.
The letter that explains how HMRC built your code: from your Personal Allowance to the number and letter your employer uses.
Tax-free pay from this job
£11,000 a year
- 1100 × 10 = £11,000, and the letter L means the standard tax-free Personal Allowance.
- England or Northern Ireland rates
- Cumulative: allowance and bands build up through the tax year, so over- or under-payments correct themselves
| Tax-free pay each month | £917.43 |
| Tax over the year on £32,000 | £4,198.00 |
| That is, each month | £349.83 |
| With 1257L instead | £3,884.00 |
Estimate with HMRC’s payroll method and the same pay every month. Only HMRC can change your code.
A P2, the PAYE Coding Notice, is the letter HMRC sends when it works out a new code for one of your jobs or pensions, to explain how the code was built. GOV.UK calls it a Tax Code Notice and says HMRC will usually contact you this way when your code changes. The logic is a simple sum. It starts from your Personal Allowance, £12,570 in 2026 to 2027, adds anything that gives you relief through the code, such as £1,260 of Marriage Allowance received or job expenses, then takes off income not taxed elsewhere and deductions such as company benefits or the High Income Child Benefit Charge. The total is the tax-free amount for that source; drop its last digit and add a letter and you have the code. GOV.UK's own example takes £1,570 of medical insurance from the allowance, leaving £11,000 and the code 1100L, which costs a basic rate payer about £26.17 more each month. Each line can be checked, and corrected, in your HMRC online account.
What a new code number changes
Change in tax each month
+£26.17
| Allowance change | −£1,570 |
| Tax over the year with 1257L | £3,884.00 |
| Tax over the year with 1100L | £4,198.00 |
Rules read on HMRC’s texts by Radif Partners · Editorial policy · Method
The structure of a coding notice
Every notice follows the same logic, because every code is built the same way (GOV.UK). A notice concerns one job or pension, since each source of income has its own code, and the items behind that code fall into two groups:
- allowances, which raise the tax-free amount: the Personal Allowance itself, Marriage Allowance received from a partner, and relief for job expenses that HMRC gives through the code for the current year;
- deductions, which lower it: company benefits such as a car or medical insurance, untaxed income such as savings interest or part-time earnings, the State Pension where another source collects its tax, the High Income Child Benefit Charge, and any tax owed from an earlier year.
HMRC subtracts the deductions from the allowances. What is left is the amount you can earn tax-free from that source over the year, and the code is that amount with its final digit replaced by a letter. A result below zero becomes a K code.
Worked examples line by line
The table rebuilds five simple notices for 2026 to 2027. The numbers are the ones GOV.UK uses or the current allowances; your own notice may combine several lines.
| Situation | Allowances | Adjustment | Tax-free amount | Code |
|---|---|---|---|---|
| Standard allowance only | £12,570 | £12,570 | 1257L | |
| Medical insurance from work | £12,570 | −£1,570 | £11,000 | 1100L |
| Marriage Allowance received | £12,570 | +£1,260 | £13,830 | 1383M |
| Job expenses with relief | £12,570 | +£600 | £13,170 | 1317L |
| Deductions above the allowance | £12,570 | −£17,320 | −£4,750 | K475 |
The K line works differently: there, 4,750 is added to taxable pay instead of being allowed tax-free, which is how HMRC's employer guidance explains K475. The guide to code numbers covers the rounding behind the last digit.
What a new code number changes
Change in tax each month
+£26.17
| Allowance change | −£1,570 |
| Tax over the year with 1257L | £3,884.00 |
| Tax over the year with 1100L | £4,198.00 |
Checking each figure
A coding notice is only as accurate as the information HMRC holds, and GOV.UK says a wrong code usually comes from incorrect or missing details. Read each line against your own records:
- benefit values: your employer can give you a record of what it reported for each benefit, including its cash value;
- pension income: compare the State Pension line with your weekly State Pension over the year, and check that a workplace pension appears at the right amount;
- estimated pay: the notice and the online service use an estimate of your income; a pay rise or a cut in hours can make it stale;
- expenses and Marriage Allowance: make sure a claim you made actually appears;
- underpayments: a line for tax owed should match the figure on your last year-end letter.
If anything is wrong, sign in to the Check your Income Tax service, update the employment, pension, benefit or expense details and let HMRC reissue the code. GOV.UK says HMRC tells you and your employer about a changed code within 15 working days. The wrong code guide follows the change through to your payslip.
What your employer sees
Your employer does not receive your letter. It gets the code through PAYE Online, the PAYE Desktop Viewer or its payroll software, in a tax code notice that employers sometimes call a P6, and it should load the new code before your next pay (GOV.UK). For a new tax year, employers hear about changed codes between January and March; a code that is not changing is simply carried forward from 6 April, without any W1 or M1 ending. During the year, a new notice reaches payroll whenever HMRC changes the code, and the tax code changes guide lists the usual triggers.