HMRC tax codes - quick guide for limited and umbrella contractors

An HMRC tax code—typically several numbers and a letter—determines how much income tax should be deducted from an employee’s salary.

This guide explains what tax codes are used for, some typical ones, and what to do if you think your code is wrong.

Tax codes – typical format

The tax code format for most individuals contains three numbers followed by a letter.

When multiplied by 10 (roughly speaking), the number element shows the amount of income the taxpayer can earn before starting to pay income tax.

The letter following the number denotes other factors affecting eligibility for the personal allowance.

For example, most working-age taxpayers have a tax code of 1257L during the 2021-22 to 2024-25 tax years.

Common tax codes and their meanings

Here is an overview of the most frequently used tax code letters and their meanings:

L – The taxpayer can receive the current personal allowance (£12,570 during the 2024/25 tax year).
T – Further variables have affected the calculation of your tax-free allowance (e.g., you earn over £100,000 or have other complex tax adjustments).
K – This code is placed before the three numbers (e.g., K459) and is used when your untaxed income is greater than your taxable income. For example, you may receive a ‘K’ code if you receive significant benefits from your employer, such as a company car.
N – Marriage allowance: you have transferred 10% of your personal allowance to your partner.
M – Marriage allowance: you have received 10% of your partner’s personal allowance.
NT – No tax is payable on this income.
0T – You have no personal allowances, so your entire salary will be subject to income tax.
S – Scottish income tax applies to your earnings or pension.
C – Welsh income tax applies to your earnings or pension.
BR, D0, D1 – These codes are used when your tax-free allowance has already been applied to another source of income.
- BR: Entire income is taxed at the basic rate (20%).
- D0: Entire income is taxed at the higher rate (40%).
- D1: Entire income is taxed at the additional rate (45%).

Further tax codes apply if you’re based in Scotland or Wales. You can find out more here.

Emergency tax codes

If your tax code has W1, M1, or X at the end, it is an ’emergency tax code’.

These codes are used if HMRC has not received your income details in time or if your situation has changed. This can happen if you change employers, start contracting via a limited company, or switch to an umbrella company.

How do you find out what your tax code is?

You can find your tax code on several key documents, or online:

Your payslip, assuming you are paid via PAYE, as limited and umbrella contractors are.
Your P45, issued when you change employment.
Your P60, an end-of-year summary showing your total salary, income tax, and NICs for the tax year.
A pension advice slip – if you have a personal pension.
Your online HMRC tax account – click here to set one up if you haven’t already.
Via the HMRC app – click here to find out more.

Additionally, HMRC may issue a coding notice explaining any changes to your tax code.

These notices are usually sent at the start of the calendar year to help your employer (accountant or umbrella provider) adjust the payroll for the following tax year.

What if you have more than one source of PAYE income?

If you earn income from multiple sources, you will typically be assigned separate tax codes for each source.

Your main salary will generally have the personal allowance applied to it.
Any additional sources of PAYE income (such as a second job) are likely to have a tax code such as BR or D0. This ensures tax is paid on the full income from these additional sources.

If you believe your personal allowance isn’t being applied correctly or you are overpaying tax on secondary income, contact your accountant, umbrella provider, or HMRC directly to request an adjustment.