Tax Codes - Explained

March 5, 2023
This guide was last updated on:
February 18, 2023

The tax code that is given to you by HMRC is use to calculate how much tax you need to pay.

It is made up of a number which identifies how much income you are allowed to earn tax free, followed by a letter.  The letter will have various implications as follows:

  • L – this means you have the standard personal tax allowance
  • M – you get 10% of your spouse’s personal allowance
  • N – you give 10% of your personal allowance to your spouse
  • S – Scottish income tax rate
  • T – there are other factors in your calculation
  • Y – you get a higher allowance as you were born before 6 April 1938
  • 0T – either you have started a new job or you have used up all of your personal allowance
  • BR – you are being taxed at the basic rate
  • D0 – you are being taxed at the higher rate
  • D1 – you are being taxed at the additional rate
  • NT – you are not taxed on this income
  • K – you have income that isn’t being taxed another way, exceeding the benefit of your personal allowance

If you are unsure about whether you are being taxed appropriately, or aren’t on the correct tax code HMRC will be able to advise what you present position is

The normal tax code for 2021/22 will be 1250L.  This means that you can earn £12,500 tax free, after which you will start to be taxed on your income.  If you take on further employment, you must ensure that you don’t duplicate your tax code

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