What does the tax code
1197L mean?
1197L means £600 has come off your allowance. If you have started drawing a pension while still employed, that is very often what the deduction represents.
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Get the detailed breakdown + free reclaim guideWorking and drawing a pension at the same time is now completely ordinary, and the tax system handles it in a way that almost nobody finds intuitive. The pension and the job are two separate payers, each operating PAYE without knowing what the other is doing, and between them they have to arrive at the right total tax on one person.
A code like 1197L is often part of how that is achieved. Your tax-free pay from this source is £11,970, £600 below standard, and it costs about £120 a year.
- 1197L Tax Code
- An ordinary L-suffix code giving £11,970 of tax-free pay for 2026/27, £600 below the standard allowance. The L means normal allowance rules apply. Where someone draws a pension alongside employment, deductions of this kind commonly relate to that pension income being brought into charge or to the allowance being allocated between the two sources.
Pensions are taxable income, and the State Pension is paid gross
Two facts do most of the work here.
Pension income is taxed like earnings. A workplace or personal pension in payment is not a tax-free windfall. It is income, subject to income tax at the same rates as wages. National Insurance is the exception: it is not charged on pension income at all.
The State Pension is paid without any tax deducted. There is no PAYE on it. If it were your only income and it fell within your Personal Allowance, no tax would arise. If you have other income too, the State Pension still has to be taxed, and the only way to do that is to collect it from a source that does operate PAYE, meaning your job or a private pension.
That is why a deduction appears in the code of the job, for income the job has nothing to do with. It is also why so many people conclude their employer has made a mistake.
The three ways a pension changes your code
The State Pension is coded out. A deduction equal to your annual State Pension entitlement, so the tax on it comes from your wages. These deductions are large, and where the State Pension exceeds the whole Personal Allowance the code becomes a K code instead.
Your allowance is split. With a job and a private pension both in payment, HMRC can allocate part of the allowance to each. Our 1244L page works through how splitting operates.
A drawdown payment was taxed on an emergency basis. First withdrawals from a defined contribution pot are commonly taxed as though the payment repeated every month, which massively over-deducts. The correction ripples through your codes afterwards.
A £600 deduction is on the small side for a coded State Pension, so for many people on 1197L the explanation is a modest private pension, a partial-year figure, or an allowance split rather than the State Pension itself. The coding notice settles it.
Worked example: 1197L on a £34,000 salary
- Gross salary: £34,000
- Subtract the 1197L allowance: £34,000 minus £11,970 = £22,030 of taxable income
- All within the basic rate band, taxed at 20%
- Income tax for the year: £4,406
- Monthly tax-free pay: £11,970 divided by 12 = £997.50
On the standard 1257L code the same salary produces £21,430 taxable and £4,286 of tax. The deduction costs £120 across the year, or £10 a month, which is the tax on £600 of pension income. Income tax only, National Insurance excluded, and an estimate to confirm with HMRC.
The important point: you have not been charged twice. The £120 is the tax on pension income you actually received. It is simply being collected from the wrong-looking place.
The part-year problem
Pensions almost never start on 6 April, and that produces a predictable two year pattern that catches people out.
Year one. The pension runs for part of the year, so the deduction reflects a part-year amount. A pension starting in January produces roughly a quarter of the annual figure.
Year two. The same pension now runs for twelve months, so the deduction is roughly four times larger. The code drops sharply and take-home pay from the job falls, with nothing having changed in the person's circumstances at all.
Nobody warns you about the second year. If you started drawing a pension part way through last year, expect this and check the new coding notice against your actual annual pension rather than being surprised in April.
The tax-free lump sum is genuinely tax free
One part of pension income does not touch your tax code at all, and it is worth separating clearly from everything else on this page.
When you begin drawing a defined contribution pension, you can normally take part of the pot as a tax-free lump sum, commonly a quarter of its value and subject to an overall limit. That amount is not taxable income. It does not appear in your code, does not reduce your Personal Allowance, and does not affect the tax on your salary.
What follows the lump sum is where the tax arises. Income drawn afterwards, whether as regular payments or further withdrawals, is taxable in the ordinary way, and that is the part your code has to deal with.
The confusion tends to come from a single mixed payment. Where a withdrawal contains both a tax-free element and a taxable one, the tax deducted looks disproportionate against the total received, because it was calculated only on the taxable part while being compared against the whole. Nothing is wrong; the arithmetic simply is not visible from the amount that arrives in your account.
The other common source of surprise is the emergency basis applied to a first withdrawal. Combined with a lump sum in the same payment, it can produce a deduction that bears no obvious relationship to anything. That overpayment is recoverable, and there are dedicated routes for reclaiming it rather than waiting for the year to reconcile.
The practical point for your code: a tax-free lump sum should never produce a coding deduction. If your code fell after taking one and nothing else changed, that is worth asking about specifically rather than assuming it must be right.
When 1197L is wrong
The pension stopped or changed. A fixed-term arrangement that ended, or a reduced payment, should reduce the deduction.
The figure is an estimate. Where HMRC has projected rather than been told, the number can be materially wrong in either direction.
It is being taxed twice. If your private pension provider is also operating a code that taxes the same income, check the two are not overlapping.
A drawdown was overtaxed. Emergency-basis deductions on one-off withdrawals are recoverable, and there are dedicated routes for reclaiming them rather than waiting for the year end.
The allowance split does not fit. Allowance sitting against a source too small to use it is allowance wasted.
Sorting it out
Sign in to your Personal Tax Account at gov.uk/personal-tax-account and open "Check your Income Tax". It lists every employment and pension HMRC believes you have, the estimated income from each, and the allowance allocated to each. Check the pension figures against what you are actually receiving, and update anything that is out of date.
The Income Tax helpline is 0300 200 3300. Our guide to checking your tax code covers where each figure appears, and our 1159L page covers taxable state benefits, which follow the same collection logic.
A corrected code applies cumulatively, so an overpayment during the current year returns through your next payslip or pension payment. Earlier years need a separate claim within four years, covered in our guide to reclaiming overpaid tax, and 2022/23 closes on 5 April 2027.
Our free tax code checker will estimate what your code should be for your circumstances. It gives an estimate rather than advice.
People also ask
- 1197L gives £11,970 of tax-free pay, £600 below the standard allowance, costing about £120 a year
- Pension income is taxable like earnings, but no National Insurance is charged on it
- The State Pension is paid gross, so the tax on it is collected from your job or a private pension instead
- That is why a deduction appears in an employer's code for income the employer knows nothing about
- A pension starting mid-year produces a small deduction in year one and a much larger one in year two
- Where a coded pension exceeds your whole allowance, the code becomes a K code
- First drawdown payments are often taxed on an emergency basis and the overpayment is recoverable
Related tax codes: 1159L tax code | 1226L tax code | K tax code | 1257L tax code | How to check your tax code
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