4 November 20255 min readMy Take Home Salary
Understanding Tax Codes 2025: What Do They Mean?
Your tax code dictates how much Income Tax gets sliced off your pay. Here's how to decode common ones like 1257L, BR, and K codes.
What is a Tax Code?
Your tax code is a combination of numbers and letters (e.g., 1257L) used by HM Revenue and Customs (HMRC) to tell your employer or pension provider how much Income Tax to collect from your wages or pension.
Common Tax Codes
- 1257L: This is the standard tax code for most people with one job or pension. It means you are entitled to the standard tax-free Personal Allowance (£12,570 for the 2025/26 tax year).
- BR: Stands for "Basic Rate". All your income from this job or pension is taxed at the basic rate (usually 20%). This is common for a second job.
- D0: All your income is taxed at the Higher Rate (40%).
- K Codes (e.g., K450): Used when you have deductions that exceed your Personal Allowance (like company car benefits or unpaid tax from previous years).
Checking Your Tax Code
You can find your tax code on:
- Your payslip.
- Your P60 or P45.
- Your personal tax account on GOV.UK.
Tip: If you think your tax code is wrong, contact HMRC immediately. You could be paying too much tax!
How to Calculate Your Take Home Pay
Use our Salary Calculator to see exactly how your tax code affects your net income. Simply expand the "Advanced Options" and enter your specific tax code.