What does the tax code
500T mean?
500T gives you only £5,000 of tax-free pay instead of £12,570, and the T means HMRC has parked your allowance under review. It is often provisional rather than final.
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Get the detailed breakdown + free reclaim guide500T is two statements in one. The number says your tax-free pay for 2026/27 is £5,000 rather than £12,570. The letter says HMRC is not treating that figure as settled. Unlike an L code, which asserts that your entitlement is known and ordinary, a T code is closer to a placeholder: it is the number HMRC is working with until something is resolved.
That combination is why 500T is worth investigating rather than accepting. It costs a basic rate taxpayer about £1,514 a year, and a meaningful share of the people carrying it should not be.
- 500T Tax Code
- A restricted tax code giving £5,000 of tax-free pay for 2026/27. The T suffix means your code includes items HMRC needs to review, or that you have asked for your details to be kept off your employer's payroll records. It is not an emergency code and it is not automatically wrong, but it is provisional in a way that an L code is not.
What the T actually signals
The T suffix is used in two quite different situations, and telling them apart is the whole job.
HMRC has items under review. Your entitlement depends on something not yet pinned down: an estimate of other income, a benefit whose value is being checked, an allowance being apportioned between two sources, or circumstances complex enough that HMRC does not want the code updated automatically each year. A T code in this sense is a holding position.
You asked for confidentiality. A taxpayer can request that the detail of their allowances is not disclosed through their code, because the composition of a code can reveal personal circumstances to a payroll department. HMRC uses a T suffix to keep the breakdown private. If this is you, the code is deliberate and correct.
Neither meaning is "you have done something wrong". But the first meaning is provisional, and provisional figures have a habit of persisting.
What 500T costs
Compared with the standard code, 500T withholds £7,570 of allowance.
| Your marginal rate | Allowance withheld | Extra tax a year | Extra tax a month |
|---|---|---|---|
| 20% basic rate | £7,570 | £1,514 | £126.17 |
| 40% higher rate | £7,570 | £3,028 | £252.33 |
That is not a rounding difference. For most people it is the largest single line on their payslip that they did not choose.
Worked example: 500T on a £40,000 salary
- Gross salary: £40,000
- Subtract the 500T allowance: £40,000 minus £5,000 = £35,000 of taxable income
- The basic rate band covers the first £37,700 of taxable income, so all £35,000 is taxed at 20%
- Income tax for the year: £7,000
- Monthly tax-free pay: £5,000 divided by 12 = £416.67
On the standard 1257L code the same salary produces £27,430 of taxable income and £5,486 of tax. The difference is £1,514 across the year, or £126.17 a month. Income tax only, National Insurance excluded, and an estimate to confirm with HMRC.
Note what does not happen: the extra tax is not a penalty and it is not lost. If the review resolves in your favour, the overpayment comes back. The problem is that it sits with HMRC in the meantime, and if the review never gets resolved, it stays there.
500T, 0T and T are three different things
These get conflated constantly, so it is worth separating them.
| Code | Tax-free pay | What it means |
|---|---|---|
| 1257L | £12,570 | Full standard allowance, settled, ordinary rules |
| 500T | £5,000 | Restricted allowance, under review or kept private |
| 1257T | £12,570 | Full allowance, but still flagged for review |
| 0T | £0 | No allowance at all, taxed from the first pound at the normal bands |
The pairing to notice is 500T and 1257T. Same suffix, same review flag, completely different amounts. The T tells you about the status of your code; the number tells you what you are actually getting. Our T tax code page covers the suffix in general and the 0T page covers the more severe case where no allowance is given at all.
Why £5,000 specifically
There is no rule that produces £5,000. It is not a statutory figure like the Personal Allowance or the Marriage Allowance transfer. When you see a round number like this in a code, it usually means one of three things.
An allowance split between sources. If you have two employments or a job and a pension, HMRC can divide your allowance between them rather than giving it all to one. £5,000 here and £7,570 there is a perfectly ordinary split, and each payer only sees its own share.
A deduction that happens to land near £7,570. A company car, medical cover and a small underpayment together can easily reduce a £12,570 allowance to about £5,000. The roundness is then a coincidence of the arithmetic.
An HMRC estimate. Where income from another source is being guessed at rather than known, round figures are common precisely because they are estimates.
The first of these is the one most often misread as an error. If your allowance is split, the code on one payslip looks alarming in isolation and is completely correct in context.
How long a T code should last
There is no fixed lifespan, and that is precisely the problem with them.
An L code is self-maintaining. Each spring HMRC rebuilds it from the standard allowance and whatever adjustments are on file, and if nothing has changed the code comes out the same. A T code is different: it exists because something was unresolved, and HMRC deliberately does not update it automatically. So a code that was a reasonable provisional figure in one year can be carried forward into the next, and the next, without anybody re-examining the assumption underneath it.
The two questions worth asking are therefore about time rather than amount. How long has this code been in place? And what event was it waiting for?
If the answer to the second question is something that has already happened, for example a benefit that ended, a job that finished, or a return that was filed, the code has outlived its purpose and should be replaced. If nobody tells HMRC that, nothing prompts the change, because the trigger for reviewing a T code is usually the taxpayer getting in touch rather than an internal timetable.
A restricted code that has been running for more than one full tax year without an explanation you recognise is the strongest single signal on this page that something needs chasing.
How to challenge it
Get the breakdown. Sign in at gov.uk/personal-tax-account, open "Check your Income Tax" and look at how the £5,000 was arrived at. This is the step that resolves most cases, because it shows whether the allowance is split, reduced, or being held back pending something.
Check every employment listed. If a job you left is still shown as live, part of your allowance is sitting against income that no longer exists. This is the single most common fixable cause of a restricted code.
Correct the estimates. Where HMRC is estimating other income, you can supply the real figure. Estimates that were reasonable two years ago are frequently indefensible now.
Call if the breakdown does not explain it. The Income Tax helpline is 0300 200 3300. Ask specifically what is under review and what HMRC needs from you to close it, because a T code often persists simply because nobody supplied a missing fact.
If a corrected code is issued during the tax year, your employer recalculates from 6 April and the overpayment comes back through payroll. If the code was wrong in a year that has already ended, that is a separate claim, and the window is four years. Our guide to reclaiming overpaid tax covers it, and the wrong tax code page covers how to build the case.
Estimate what your code should be first with our free tax code checker, so the conversation starts with a figure rather than a feeling. It gives an estimate, not advice.
People also ask
- 500T restricts your tax-free pay to £5,000 in 2026/27, withholding £7,570 of the standard allowance
- It costs a basic rate taxpayer about £1,514 a year and a higher rate taxpayer about £3,028
- The T suffix means the code is under review or deliberately kept private, not that anything is wrong
- A T code is provisional, and provisional codes persist when nobody supplies the missing information
- The most common innocent explanation is an allowance split across two employments or a job and a pension
- A job you left that is still showing as live is the most common fixable cause
- Corrections within the year refund through payroll, but closed years need a separate claim within four years
Related tax codes: T tax code | 0T tax code | 1257T tax code | 1257L tax code | Wrong tax code?
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