Understanding Your UK Payslip and Tax Code
Published 2 August 2026
Your tax code is a short code such as 1257L. HMRC (the UK tax office) gives it to your employer, and it tells your employer how much of your pay is tax-free. If the code is right, you pay the right tax. If the code is wrong, you pay too much or too little, and your payslip will look strange.
New arrivals very often get the wrong code. The reason is simple. When you start your first UK job, your employer does not have your UK tax history, because you do not have one yet. So HMRC puts you on an emergency tax code until it has your details. On an emergency code, many people pay hundreds of pounds more tax than they should. The good news is that this is normal, it is fixable, and you can get the money back.
All figures in this guide are for the 2026 to 2027 tax year, which runs from 6 April 2026 to 5 April 2027. Tax figures change each April, so always check the current year on GOV.UK.
How PAYE works
PAYE stands for Pay As You Earn. Your employer takes tax and other deductions out of your pay before the money reaches your bank account, so most employees never fill in a tax return.
Two things drive the calculation:
- Your Personal Allowance. This is the amount you can earn each tax year without paying any Income Tax. For the 2026 to 2027 tax year it is £12,570 for most people.
- Your tax code. This tells your employer how much of that allowance to give you, spread evenly across the year.
Income Tax rates for England, Wales and Northern Ireland in the 2026 to 2027 tax year:
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
If you live in Scotland, different rates and bands apply and your tax code starts with the letter S. If you live in Wales, your code starts with C.
How to read your payslip
By law your employer must give you a payslip on or before payday, showing your pay before and after deductions. Here is what the lines usually mean.
| Line on your payslip | What it means |
|---|---|
| Gross pay | Your full pay before anything is taken off. |
| Tax code | The code HMRC gave your employer, for example 1257L. Check this line first. |
| Income Tax (or PAYE) | Tax taken off under PAYE, based on your tax code. |
| National Insurance (NI) | A separate contribution that builds your right to the State Pension and some benefits. |
| Pension | Your contribution to a workplace pension, if you are enrolled. |
| Student Loan | A repayment, only if you have a UK student loan and earn above the threshold for your plan. |
| Net pay (or take-home pay) | What actually lands in your bank account after all deductions. |
| Year to date (YTD) | Running totals for the tax year so far. Useful for spotting overpaid tax. |
| NI number | Your National Insurance number. Check it is correct. |
National Insurance in the 2026 to 2027 tax year: employees pay Class 1 contributions at 8% on earnings between £242 and £967 a week (£1,048 to £4,189 a month), and 2% on anything above that. National Insurance is not affected by your tax code, so a wrong tax code changes your tax but not your NI.
Workplace pension: if you are automatically enrolled, the legal minimum total contribution is 8% of your qualifying earnings, of which your employer must pay at least 3%. This money is not lost. It is saved for your retirement.
Student loan: you only repay a percentage of the income you earn above the threshold for your loan plan. Thresholds change each tax year, so check yours on GOV.UK.
Decoding the common tax codes
The numbers tell your employer how much tax-free income you get from that job in the tax year. Take the number and add a zero: 1257 means £12,570 of tax-free pay. The letters describe your situation.
| Tax code | What it means | Who usually gets it |
|---|---|---|
1257L | You get the standard tax-free Personal Allowance of £12,570 (2026 to 2027 tax year). | Most employees with one job and no adjustments. This is the normal code. |
BR | Basic Rate. All income from this job is taxed at 20%, with no tax-free allowance. | Usually a second job or a pension, where your allowance is already used by your main job. Wrong if this is your only job. |
D0 | All income from this job is taxed at the higher rate, 40%. | Usually a second job for a higher earner. |
D1 | All income from this job is taxed at the additional rate, 45%. | Usually a second job for a very high earner. |
0T | No tax-free allowance at all, and tax is charged at the normal rates on everything you earn. | You started a new job and your employer does not have the details they need, or your allowance is fully used up. Very common for new arrivals. |
1257L W1 | Emergency code, weekly pay. | New starters paid weekly. |
1257L M1 | Emergency code, monthly pay. | New starters paid monthly. |
1257L X | Emergency code, pay dates that vary. | New starters with irregular pay. |
NT | No Tax is taken from this income. | Rare, and only in specific situations. |
K prefix, e.g. K475 | You have income that is not being taxed another way, or benefits, worth more than your allowance. Extra tax is added instead of allowance being given. | People with taxable benefits such as a company car, or who owe tax from an earlier year. |
S prefix, e.g. S1257L | Scottish rates apply. | People who live in Scotland. |
C prefix, e.g. C1257L | Welsh rates apply. | People who live in Wales. |
M or N suffix | Marriage Allowance. M means you received 10% of your partner's allowance. N means you gave 10% of yours away. | Married couples and civil partners who applied for it. |
What an emergency code actually does
A normal tax code is cumulative. Your employer looks at your total pay and total tax for the whole tax year so far, and adjusts each payday so the totals stay correct.
An emergency code (W1, M1 or X, sometimes shown as NONCUM on a payslip) is non-cumulative. It looks only at the current week or month, and ignores everything earlier in the tax year. So if you arrived in September and had no UK income from April to August, the code throws away five months of unused Personal Allowance. You get one month's worth, and you pay too much tax. A 0T code is worse, because it gives you no allowance at all.
Why new arrivals get emergency codes so often
- You have no P45. A P45 is the form a previous UK employer gives you when you leave a job. It shows your pay and tax so far this year. With no UK job history, you have no P45, so your employer uses a starter checklist instead and HMRC has to work things out later.
- Your National Insurance number is missing or new. If your record is not yet matched to you, your details can take longer to reach HMRC. See our guide on getting a National Insurance number.
- You started part-way through the tax year. Unused allowance from earlier months is exactly what a non-cumulative code ignores.
- You have two jobs. A
BRcode on the second job is often correct, but not always.
HMRC usually updates your code within about 35 days of you starting, and sends the new code to you and to your employer. It does not always happen on its own, so check.
How to check your tax code
- Look at your payslip. The tax code is printed on it.
- Sign in to the free Check your Income Tax service on GOV.UK at
gov.uk/check-income-tax-current-year, or use the HMRC app. You will need a Government Gateway account, and you may need photo ID such as a passport to prove who you are. - Check any tax code notice letter HMRC sends you. It explains how the code was worked out.
Ask yourself two questions. Is this my only job? If yes, a BR, D0 or 0T code is probably wrong. Does my code end in W1, M1 or X? If yes, you are on an emergency code and are likely paying too much.
How to fix a wrong tax code
- Give your employer your P45 if you have one from an earlier UK job this tax year. This is the fastest fix.
- Complete the starter checklist honestly if you have no P45, and choose the statement that matches your situation. Choosing the wrong statement is a very common cause of a wrong code.
- Tell HMRC yourself. Use the Check your Income Tax service to report your income and your jobs. You can also phone HMRC. Have your National Insurance number ready.
- Watch your next payslip. When the correct cumulative code arrives, the extra tax you paid is usually repaid to you automatically through your pay, so your take-home amount jumps up.
It is your responsibility to make sure you are paying the right amount of tax, so do not wait for someone else to notice.
Getting a refund if you were overtaxed
If the correction happens while you are still in the same job, you normally get the money back in your pay, without doing anything else.
If it does not, HMRC checks employee records after the tax year ends. If you paid too much, HMRC sends a tax calculation letter, known as a P800, or a Simple Assessment letter. These are usually sent between June and March after the end of the tax year, and the letter tells you how to claim your refund.
You do not have to wait. GOV.UK has a tool at gov.uk/claim-tax-refund that asks a few questions and tells you exactly which route to use for your situation.
Quick checklist for your first UK job
- Apply for your National Insurance number as early as you can.
- Give your employer your P45, or fill in the starter checklist carefully.
- Read your first payslip properly, especially the tax code line.
- If the code ends in
W1,M1orX, or is0TorBRon your only job, contact HMRC. - Keep every payslip, and keep your P60 at the end of the tax year. It is proof of your pay and tax, and you will need it for many things, including some visa and settlement applications.
A wrong tax code is annoying, but it is not a mistake by you and it is not permanent. Check it early, fix it once, and the money comes back.