It is usually made up of several numbers and a letter, for example: 1000L.
If you multiply the number in your tax code by ten, you will get the total amount of income you can earn in a year before paying tax.
For example, the tax code 117L means:
- you are entitled to the basic Personal Allowance
- £1,170 must be taken away from your total taxable income and you pay tax on what's left
Some commonly used tax codes and what they mean :
- 1000L - For people who are eligible for the basic Personal Allowance for the tax year 2014 - 15. It is also used for 'emergency' tax codes.
- BR - is used when all your income is taxed at the basic rate - currently 20% (most commonly used for a second job or pension)
- NT - when no tax is to be taken from your income or pension
The tax code spreads your tax-free amount equally over the year so that you get about the same take-home pay or pension each week or month.