Overview
- Payslip codes determine PAYE deductions, with HMRC instructing employers and pension providers which code to use.
- The most common code is 1257L, reflecting the £12,570 Personal Allowance, though benefits such as medical insurance can reduce it.
- A leading 'K' signals HMRC is collecting tax on untaxed income or past underpayments through current pay, and no more than half of pre‑tax income can be taken.
- Emergency markers W1, M1 and X indicate temporary calculations, often after job changes or new benefits, and should be reviewed.
- Taxpayers can check codes on payslips, the HMRC app or gov.uk, and if a code is corrected HMRC will adjust with the employer, repay overpaid tax in the next payslip, and allow claims up to four years, with experts reporting typical rebates around £3,000.