UK PAYE Tax Codes 2025: Emergency Codes, Adjustments, and Refunds
Understand UK PAYE Tax Codes for 2025
PAYE tax codes determine how much income tax employers deduct from salaries. Misapplied codes can lead to overpayments or unexpected bills, so monitoring your code throughout 2025 is essential.
Common Tax Codes
- 1257L: Standard personal allowance (£12,570) for most employees.
- BR: Basic rate (20%) applied when personal allowance is used elsewhere.
- D0/D1: Higher (40%) or additional (45%) rate on all income under that employment.
- K codes: Negative allowances due to taxable benefits exceeding reliefs.
- W1/M1: Week 1/Month 1 emergency codes ignoring cumulative earnings.
When Codes Change
HMRC adjusts codes after benefit changes, new jobs, student loan updates, or marriage allowance transfers. Employers receive electronic updates (P6/P9 notices). Employees should review pay slips to verify codes each month.
Correcting Errors
If you receive an incorrect code, contact HMRC or update via your Personal Tax Account. Provide details of benefits in kind, company cars, or expected income changes. Employers cannot change codes without HMRC instruction.
Year-End Reconciliations
HMRC issues P800 calculations when you overpaid or underpaid tax. Refunds arrive automatically, or you may adjust future codes to recover underpayments. Keep P60 forms and P45s for accurate record-keeping.
Recommendation: Review your code after major life events, use our UK calculator to validate deductions, and respond promptly to HMRC correspondence.