Is HMRC taxing you
correctly?

How to read your UK tax code

Every PAYE tax code has up to three parts: an optional prefix, a numeric portion, and a suffix letter. Some codes are entirely letters (BR, D0, D1, NT) and apply a flat rate or zero rate to all income. Understanding each part tells you exactly what HMRC thinks your tax-free allowance is and why.

Emergency tax codes explained

An emergency tax code (marked W1, M1, or X after the main code) means your employer does not have enough information to apply the correct cumulative tax code. Instead, each pay period is taxed in isolation. This almost always means you overpay tax, because earlier months of unused personal allowance are not carried forward.

Emergency codes are most common when you start a new job without giving your employer a P45 from your previous role, or when HMRC has not yet confirmed your correct code for the tax year.

The 7 reasons your tax code might be wrong

HMRC calculates your tax code based on information from your employer, previous tax returns, and estimated income. If any of these inputs are incorrect or outdated, your code will be wrong. Here are the most common causes:

1. Starting a new job without a P45. Without a P45 from your previous employer, HMRC defaults to an emergency tax code. Your new employer taxes you on a non-cumulative basis, usually resulting in hundreds of pounds of overpayment until the correct code is issued.
2. Benefits in kind not updated.Company car, private medical insurance, or other taxable benefits are collected through your tax code by reducing your Personal Allowance. If HMRC has the wrong benefit value (from a previous year's P11D), your code will be too low or too high.
3. State Pension combined with employment. If you receive State Pension alongside an employer salary, HMRC reduces your tax code to collect tax on the pension through your employment. If the pension amount recorded by HMRC is wrong, your code will be incorrect.
4. Marriage Allowance not applied or wrongly applied. If you or your partner are eligible for Marriage Allowance but have not claimed it, you are missing £252 per year in tax savings. Conversely, if Marriage Allowance is still applied after a relationship ends, your code will be wrong.
5. Prior year underpayment being collected. HMRC can collect underpaid tax from a previous year through your current tax code (up to £3,000). If this adjustment has already been paid but HMRC has not removed it, your allowance is lower than it should be.
6. Multiple employments with split allowance. When you have two or more jobs, HMRC splits your Personal Allowance between employers. If the split is wrong (for example, all allowance on your lower-paying job), you can end up overpaying on one and underpaying on the other.
7. Pension contributions not reflected. If you make pension contributions via a net-pay scheme, the relief is automatic. But if your pension uses relief at source and you are a higher-rate taxpayer, the additional relief needs to be claimed via Self Assessment or your tax code.

How to claim back overpaid PAYE tax

HMRC allows you to claim a refund for overpaid income tax going back 4 full tax years. For example, in the 2025/26 tax year you can claim back overpaid tax from 2021/22, 2022/23, 2023/24, and 2024/25.

There are three main ways to get a refund:

1. P800 tax calculation.Each autumn, HMRC sends P800 letters to employees whose PAYE records show an overpayment or underpayment. If you are owed money, HMRC will either refund it directly or adjust your next year's tax code. Check your Personal Tax Account online if you have not received a P800.
2. Self Assessment tax return. If you file a Self Assessment return (for example because you have self-employment or rental income), any overpaid PAYE will be offset against your total tax bill. If PAYE exceeds your total liability, HMRC issues a refund.
3. Direct claim to HMRC. You can write to HMRC or call 0300 200 3300 to request a review of your tax code and claim a refund for previous years. You will need your P60s and details of your income and deductions for each year you are claiming for.

Marriage Allowance and your tax code

Marriage Allowance lets one partner transfer £1,260 of their unused Personal Allowance to the other, saving up to £252 per year. The transferring partner's tax code ends in N (reduced allowance), while the receiving partner's code ends in M (increased allowance).

You can claim Marriage Allowance if you are married or in a civil partnership, and the lower-earning partner earns less than £12,570 (so they have unused allowance to transfer). The higher-earning partner must be a basic rate taxpayer (income under £50,270). Claims can be backdated up to 4 years. A couple who has been eligible since April 2021 could claim up to £1,260 in total.

Common mistakes: not cancelling Marriage Allowance after separation or divorce (the transfer continues until cancelled), or the higher earner applying when they earn above £50,270 (they would not benefit as Marriage Allowance does not apply to higher-rate taxpayers).

Scotland tax codes: the S prefix

If you live in Scotland, your tax code begins with an S prefix (for example S1257L). Scottish income tax rates are set by the Scottish Parliament and differ from the rest of the UK. For 2025/26, Scotland has six income tax bands: starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%), and top (48%).

The most important difference is the higher rate threshold. In Scotland, the 42% rate starts at £43,662, compared to £50,270 in England, Wales, and Northern Ireland. This means someone earning £50,000 in Scotland pays significantly more income tax than the same earner in England.

Your Scottish taxpayer status is determined by where you live on 6 April each year. If you move to Scotland during the tax year, the S prefix applies from the following April. If your code has the wrong prefix (S when you live in England, or no S when you live in Scotland), contact HMRC to correct it.