Tax code

A tax code is made up of letters and numbers and is usually shown on your payslip. The number, 747 for example, should reflect how much tax-free pay you're allowed to earn in each tax year, £7,475 for 2011-12. As a general guide you need to multiply your tax code by 10 to get the total amount of income you can earn each year before being taxed.

The tax code letter which is generally after the number gives your employer further information on the type of allowances you receive or the rate of tax that should be charged. The tax codes below are the most common ones you will come across.

• BR - All your pay from this source is taxed at the basic rate. This is because your allowances have already been used up against your other income.
• K - Total deductions exceed your allowances. If the untaxed income on which tax is still due is greater than your annual allowances you'll be given a K code, to ensure you pay tax on the excess. While other tax code numbers indicate the amount you can have tax-free, the number in a K code multiplied by ten broadly indicates how much must be added to your taxable income to take account of the excess untaxed income you received.
•  L  You get the basic personal allowance for a person under aged under 65
• NT  You pay no tax on this income
• T  Used if your tax office needs to review your tax code – for example, if your tax affairs are complex. You can ask for a T code to keep your personal details confidential.

Been on an incorrect tax code at any point?

• Begin your Online Tax Refund Claim today, use the calculator alongside to calculate your refund or call us on 0808 141 5503 if you need any further information.