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HMRC changed my tax code because of savings interest — and got it wrong
7 min read
The letters at the end of your UK tax code are far more meaningful than most workers realise. While the number in your code (like 1257 in the standard 1257L) tells your employer how much tax-free personal allowance you receive, the letter that follows it tells them a great deal about your specific tax situation. Getting the wrong letter can result in months of overpayment or underpayment.
The Most Common Tax Code Letters
L — Standard Personal Allowance
The letter L means you are entitled to the standard Personal Allowance for the year. In 2026/27, this is £12,570, resulting in the standard code 1257L. This is the most common code in the UK and applies to the majority of employees with a single job. If your code ends in L, it means nothing unusual is happening with your tax situation.
M — Marriage Allowance (Recipient)
If your code ends in M, it means your spouse or civil partner has transferred 10% of their Personal Allowance to you via the Marriage Allowance scheme. For 2026/27, this gives you an additional £1,257 of tax-free allowance, resulting in a code of 1383M. You must earn less than £50,270 to be eligible to receive this transfer.
N — Marriage Allowance (Transferee)
The N suffix is the mirror of M. If your code ends in N (e.g., 1131N), it means you have transferred 10% of your Personal Allowance to your spouse. Your own allowance is therefore reduced by £1,257. You must not pay Income Tax at the Higher Rate to be eligible to make this transfer.
T — Additional Review Required
The T suffix means HMRC needs to review your tax code before it can be finalised. This typically happens when your situation involves various allowances or adjustments that are complex to calculate automatically. It is a temporary holding code and should eventually be replaced by a standard code once HMRC completes its review.
0T — Zero Personal Allowance
The 0T code (read as "zero T") means all of your personal allowance has been used up or taken away. This happens when your income is too high (over £125,140), you have large outstanding tax debts being collected through PAYE, or you have started a new job and your employer has zero information about your tax situation.
BR — Basic Rate, No Allowance
BR means every pound you earn is taxed at the basic rate of 20% with no personal allowance. It is the correct code for a second or additional job where your full personal allowance is already being used by your primary employer. It is incorrect and very expensive on a primary job.
D0 and D1 — Higher and Additional Rate, No Allowance
D0 taxes all income at 40% (the Higher Rate). D1 taxes all income at 45% (the Additional Rate). These apply to additional incomes (like a second job or pension) for very high earners where all lower rate bands have been exhausted on a primary income source.
K — Negative Personal Allowance
A K code is applied when you have a large taxable benefit or outstanding tax debt that exceeds your entire personal allowance. The number after K represents extra "phantom" taxable income being added to your payslip. For example, K400 adds £4,000 of phantom income to your salary for tax calculation purposes. This is the only tax code that can result in your employer deducting more than 50% of your gross pay in tax (though this is capped at exactly 50% by law).
S — Scottish Taxpayer
The S prefix (e.g., S1257L) denotes a Scottish taxpayer. Your employer deducts Scottish Income Tax rates instead of the UK-wide rates. This is determined entirely by your main place of residence, not where you work.
C — Welsh Taxpayer
The C prefix (e.g., C1257L) denotes a Welsh taxpayer. Wales currently uses the same income tax rates as England, so the practical effect is identical to 1257L. However, the C code exists so HMRC can attribute the revenue to the Welsh Government's block grant.