Understanding your tax code in 2026
The tax code is fundamental to the operation of PAYE. It is made up of letters and numbers which take account of the allowances that you receive and also any deductions from those allowances, for example, to collect underpaid tax. If you have received a tax code for the 2026/27 tax year, it is important that you understand what it means and check that it is correct.
The number in the tax code tells the employer or pension provider how much tax-free pay you are entitled to for the tax year. The number is found by taking the personal allowances that the individual is entitled to for the tax year (if any). Deductions are made to collect unpaid tax, tax on untaxed income, such as interest received gross, tax on company benefits which have not been payrolled and the High Income Child Benefit Charge.
The final digit is removed to arrive at the number in the tax code. Where the code is a suffix code, a letter is added at the end. This may be L, M, T, M1, W1 or X.
L indicates that the person is in receipt of the standard personal allowance. For 2026/27, where a person is entitled to the standard personal allowance of £12,570 and has no deductions in their code, their tax code will be 1257L.
Code M indicates that a person has received the marriage allowance from their spouse or civil partner, while code N indicates that a person has transferred 10% of their personal allowance to their spouse or civil partner.
A T in the tax code indicates that the tax code includes other calculations to work out the personal allowances, for example, where adjusted net income exceeds £100,000 and the personal allowance is abated.
Codes that contain M1 and W1 indicate that the individual is on an emergency code operated on a non-cumulative basis. X also indicates an emergency code. NONCUM also indicates that tax is be calculated on a non-cumulative basis.
Where deductions exceed allowances, the number is preceded by a K (a K code).
There are also a number of special codes:
- 0T – the personal allowance has been used up elsewhere or a person has started a new job, and the employer does not have the details needed to give the employee a correct tax code;
- BR – all income from the job is to be taxed at the basic rate;
- D0 – all income from the job is to be taxed at the higher rate; and
- D1 – all income from the job is to be taxed at the additional rate.
Where the taxpayer is a Welsh taxpayer, their code is preceded by a C. Scottish taxpayers have an S prefix, so that CD0 would be a Welsh taxpayer where all income from the job is taxed at 0the higher rate. As there are more Scottish rates of tax, there are more codes – SD0), SD1, SD2 and SD3, indicating that all income is taxed, respectively, at the Scottish intermediate rate, the Scottish higher rate, the Scottish advanced rate and the Scottish top rate.
Updating your code
If you think that your tax code is wrong, it may be because HMRC have missing or incorrect information. Taxpayers can update their details using the ‘Check your income tax online’ service on the Gov.uk website. If HMRC need to amend the code, they should do this within 15 days.
Taxpayers can also write to their tax office if they think that their code is wrong.
