Understanding Your Tax Code

Your tax code will normally start with a number and end with a letter

1150L is the tax code currently used for most people who have one job or pension

The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year

  1. HMRC works out your tax-free Personal Allowance
  2. Income that you haven’t paid tax on (such as untaxed interest or part-time earnings) and the value of any benefits from your job (such as a company car) are added up
  3. The income that you haven’t paid tax on is taken away from your Personal Allowance. What’s left is the tax-free income you’re allowed in a tax year
  4. The last digit in the tax-free income amount is removed

Letter

 What it means

L

You’re entitled to the standard tax-free Personal Allowance

M

Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance

N

Marriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner

S

Your income or pension is taxed using the rates in Scotland.

T

Your tax code includes other calculations to work out your Personal Allowance, for example it’s been reduced because your estimated annual income is more than £100,000

0T

Your Personal Allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code

BR

All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)

D0

All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)

D1

All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)

NT

You’re not paying any tax on this income

You can check your tax code here