Tax codes one by one
Tax code numbers
From your Personal Allowance to the four digits on your payslip, and from those digits to the free pay of each month.
Tax-free pay behind a code number
Tax-free a year
£11,000
| Free pay in month 1 | £917.43 |
| Free pay in week 1 | £211.73 |
| Against the Personal Allowance | −£1,570 |
HMRC’s tables add £9 to the code number × 10, so the free pay is a few pence above a twelfth of it.
The number in a tax code is the yearly amount you can earn tax-free from that job or pension, with its last digit dropped. GOV.UK describes how HMRC builds it: start from the Personal Allowance of £12,570, take off income you have not paid tax on and other deductions such as company benefits, add anything that gives relief, then swap the last digit for a letter. With nothing to adjust, that gives 1257. GOV.UK's own example is medical insurance worth £1,570, which leaves £11,000 and the code 1100L. Marriage Allowance moves £1,260 between partners, giving 1383M and 1131N. The State Pension, paid without tax taken off, comes off the code on another pension or job, which is why many pensioners have low numbers. To read a code the other way, multiply the number by ten. The payroll then spreads it: code 1257 gives £1,048.26 of free pay a month and £241.92 a week, from HMRC's tables. When deductions exceed the allowance, the number moves behind a K and is added to pay instead.
Company benefits and your code
New code
1100L
| Extra tax over the year | £314.00 |
| Each month | £26.17 |
| Tax-free amount left | £11,000 |
Rules read on HMRC’s texts by Radif Partners · Editorial policy · Method
From allowance to code: worked examples
Each line below starts from the £12,570 allowance for 2026 to 2027, applies one change and drops the last digit. Dropping the digit always rounds down: £11,310 becomes 1131, not 1132.
| Situation | Tax-free amount | Code | Free pay each month |
|---|---|---|---|
| Standard allowance only | £12,570 | 1257L | £1,048.26 |
| Medical insurance of £1,570 | £11,000 | 1100L | £917.43 |
| Marriage Allowance received | £13,830 | 1383M | £1,153.26 |
| Marriage Allowance transferred | £11,310 | 1131N | £943.26 |
| Job expenses of £600 with relief | £13,170 | 1317L | £1,098.26 |
| Full new State Pension (£12,547.60 a year) on top of a workplace pension | £22.40 | 2L | £2.42 |
The State Pension line explains a common surprise. The full new State Pension pays £241.30 a week. HMRC counts 1 week at the rate before April and 51 weeks at the rate after it, as set out in its guide to how the State Pension is taxed. At the same rate all year that is £12,547.60, which uses nearly all of the allowance and leaves a code of 2L on the workplace pension.
From code back to pay
The employer guidance reads codes the other way: multiply the number by ten to get the income that can be earned before tax. With 1257L and a salary of £27,000, taxable income is £14,430. Payroll software needs a figure per pay period, so HMRC's specification for PAYE tax routines turns the number into free pay for week 1 or month 1. For numbers up to 500, it takes the number times ten, adds £9, divides by 52 or 12 and rounds up to the penny.
Larger numbers are cut into blocks of 500. Each full block is worth a fixed £416.67 a month (£96.16 a week), and the remainder is valued with the small-number rule. Code 1257 is two blocks plus 257: £833.34 plus £214.92, which makes £1,048.26. If the number divides exactly by 500, one block is treated as the remainder, so 1500 is two blocks plus 500. In month 2 the free pay doubles, in month 3 it triples, and so on through the year on a cumulative code.
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 |
When the number goes negative: K codes
If deductions are larger than the allowance, there is nothing tax-free left, and the excess must be taxed. HMRC then puts a K in front of the number. GOV.UK gives the example of K475: £4,750 is added to your pay before tax is worked out, the opposite of free pay. The same block method applies, and the tax taken in any period is capped at 50% of the pay. The K code page covers this in detail.
One rule ties all of this together: the letter never changes the arithmetic. HMRC's specification says the suffix plays no part in the calculation, so 1100L, 1100M or 1100T produce the same free pay and the same tax. Only the number and any prefix, S for Scotland, C for Wales or K for an addition to pay, change what leaves your payslip.
Checking your own number
Your HMRC online account shows the build of your code line by line: the allowance, each deduction, each addition and the result. Compare each line with your own records. A benefit you no longer receive, a State Pension figure from a previous year or an expense claim that has not been added are typical examples of a line that needs correcting. Changes there reach your employer as a new code, and a cumulative payroll corrects the tax for the months already paid.