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Understand Your Tax Code

Ever wondered what exactly does tax code on your payslip mean?

Numbers in your tax code show how much tax-free income you get in that tax year (multiplied by 10).

Letters refer to your situation and how it affects your Personal Allowance.

Emergency tax codes ending with M1 (Month 1) or W1 (Week 1) are temporary and calculate tax only on current pay period, not the whole year.

So if your current tax code on payslip is 1257L, it simply means that £12,570 is tax free. L means you're entitled to standard personal allowance.

If you have different tax code on your payslip, you can check the meaning of it at or contact us for more information.

Remember that if you think your tax code is wrong, you should report it to HMRC!

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