The 1257L tax code is the standard UK PAYE code issued by HMRC to indicate that an employee receives the full £12,570 Personal Allowance for the tax year.
As the default tax code for most workers, the 1257L code determines how much tax your employer deducts through the Pay As You Earn system and ensures that your annual tax-free threshold is applied correctly.
The 1257L tax code for employees provides essential guidance for accurate income tax calculations, prevents over-deductions, and aligns your payslip with HMRC’s current Personal Allowance rules.
What Are Tax Codes? Why Are They Important?
Before we immerse ourselves in the specifics of the 1257l tax code, it is crucial to lay the groundwork and answer the fundamental question: What are tax codes? Why are they important?
Tax codes are shorthand indicators used by HMRC to communicate an individual’s total tax-free income allowance for the year.
This figure determines how much money your employer or pension provider should deduct as Income Tax from your gross pay or pension via PAYE.
Without an accurate tax code, such as the 1257l tax code, your deductions would be wildly inaccurate, potentially leading to significant underpayments or overpayments of tax throughout the year.
The importance of knowing and checking your tax code 1257l cannot be overstated. An incorrect code could be inadvertently instructing your payroll department to tax too much, meaning you are effectively giving HMRC an interest-free loan.
Conversely, a code that gives too much allowance could result in a large tax bill at the end of the year, often a nasty surprise. Checking the tax code 1257l on your payslip is a vital annual financial health check.
What Does the 1257L Tax Code Mean?
To truly grasp the implications of your 1257l tax code, you must understand the two distinct parts of the code: the number and the letter.
The Numbers: Your Personal Allowance
The numerical part of the tax code 1257l is the most straightforward component, representing the total amount of tax-free income you are permitted to earn in a given tax year.
The number ‘1257’ in the 1257l tax code is multiplied by ten to arrive at the Personal Allowance figure:
1257 x £10 = £12,570
This means that if your only source of taxable income is your salary, and you have the tax code 1257l, you can earn £12,570 before being subject to Income Tax. This is the 1257l tax code meaning in its purest form.
The Letter: What Does L Mean on a Tax Code?
The letter ‘L’ following the number in the 1257l tax code is an extremely common identifier. What does L mean on a tax code? The letter ‘L’ indicates that the individual is entitled to the standard, tax-free Personal Allowance.
This is the allowance afforded to most taxpayers who are under 65 and are not claiming marriage allowance or other specialised allowances.
The ‘L’ ensures that the employer applies the standard rate of Income Tax (20%) to any earnings that exceed the £12,570 allowance. This is the reason why the 1257l tax code is considered the default code for single-job earners.
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Who Gets the 1257L Tax Code?
The 1257L tax code applies to the majority of people in the UK who:
- Are under the age of 65.
- Have only one job or pension.
- Do not receive significant untaxed income.
- Have not claimed Marriage Allowance.
- Are not repaying any student loans through PAYE.
- Do not receive taxable benefits-in-kind (such as a company car).
If you meet the standard criteria with no adjustments needed for your income, you’re likely to be issued this tax code by HMRC.
Different Types of Tax Codes and When 1257L Changes
The 1257l tax code is the default, but HMRC uses numerous Different types of tax codes to cover the entire spectrum of employment, pensions, benefits, and allowances.
Understanding these is essential for answering questions like, What does tax code 1275L mean? and for troubleshooting why your code may have deviated from the standard tax code 1257l.
| Code | Meaning | Implication |
| 1257L | Standard Personal Allowance (L) | Entitled to the full £12,570 tax-free amount. |
| BR | Basic Rate (BR) | Used for a secondary income source (e.g., a second job or pension). Taxes all income at the basic 20% rate from pound one. This is the dreaded br tax code. |
| D0 | Higher Rate (D0) | Used for a secondary income source. Taxes all income at the higher 40% rate from pound one. |
| K | Tax due on benefits/untaxed income (K) | Your untaxed income or taxable benefits (e.g., company car) exceed your Personal Allowance, effectively giving you a negative allowance. |
| T | Other allowances/deductions (T) | HMRC needs to review your tax affairs because the code contains factors that are complex or restricted, such as specific deductions. |
| M & N | Marriage Allowance | If you receive 10% of your partner’s allowance (M) or they transfer 10% to you (N). This code is not the 1257l tax code standard. |
| NT | No Tax (NT) | Usually used for non-residents or those whose total income is under the Personal Allowance. |
Case Study: What Does Tax Code 1275L Mean?
You might ask, What does tax code 1275L mean? Following the logic of the 1257l tax code structure, the number 1275 means your Personal Allowance is £12,750 (1275 x £10).
This higher allowance suggests you have claimed or are entitled to an additional tax relief or deduction that increases your tax-free amount beyond the standard £12,570. Examples include:
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Tax relief for professional subscriptions (like in the example provided by competitors).
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Claiming expenses related to your employment.
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The Marriage Allowance transfer, where you receive a portion of your spouse’s allowance.
Whilst the 1257l tax code is the most common, understanding codes like 1275L helps you spot when an adjustment has been made, and whether that adjustment is correct.
The Implication of 1257L Tax Code on Higher Earners and Tax Thresholds 2025
The 1257l tax code establishes your tax-free foundation, but its primary function is to determine when you enter the various income tax bands.
As expert Tax Advisors, we must look ahead to anticipated tax thresholds 2025 and how they interact with the standard 1257l tax code.
The crucial point is that the £12,570 tax-free amount determined by the tax code 1257l remains static for most taxpayers up to the Higher Rate threshold.
Navigating the 40 Tax Bracket
For the current tax year (and potentially in tax thresholds 2025), the standard tax bands for England, Wales, and Northern Ireland are:
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Starter Rate (0%): Up to the Personal Allowance determined by the 1257l tax code (£12,570).
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Basic Rate (20%): On income between £12,571 and £50,270.
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Higher Rate (40%): On income between £50,271 and £125,140.
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Additional Rate (45%): On income above £125,140.
The 1257l tax code is therefore central to calculating when you cross into the 40 tax bracket. If you earn £60,000 annually and have the 1257l tax code:
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The first £12,570 is tax-free.
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The next £37,700 (£50,270 – £12,570) is taxed at the 20% Basic Rate.
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The remaining £9,730 (£60,000 – £50,270) falls squarely into the 40 tax bracket.
It is critical for those approaching the 40 tax bracket to ensure their 1257l tax code is correct, as any error will be magnified at these higher rates.
Furthermore, if your income exceeds £100,000, your Personal Allowance, represented by the 1257l tax code, starts to taper away, reducing by £1 for every £2 earned over this threshold.
This is another reason why ensuring the correct 1257l tax code is essential.
Tax Code for Pensions and Secondary Jobs
The 1257l tax code works perfectly for an individual with a single, straightforward employment.
However, when multiple income streams are involved, the use of the 1257l tax code becomes more complex, often requiring the use of supplementary codes like the br tax code.
1. Multiple Employments and the BR Tax Code
If you have two or more jobs, HMRC will generally try to allocate your entire Personal Allowance (£12,570 from the 1257l tax code) to your main source of income (usually the highest-paying one).
For your second, or subsequent, job, HMRC must ensure that no tax-free allowance is claimed twice. In this scenario, HMRC will likely issue a br tax code (Basic Rate) to the employer of your second job.
What is the significance of the br tax code? The br tax code means 20% of all earnings from that source will be taxed from the very first pound, as the Personal Allowance (linked to your 1257l tax code) is already being used elsewhere.
If you see the br tax code on your main payslip, it is a significant red flag indicating an error, and you need to initiate the process of how to correct your tax code immediately.
2. Income Tax on State Pension
A frequent query, especially for retired individuals, is how the 1257l tax code interacts with income tax on state pension. It is a common misconception that the State Pension is tax-free. It is not. The UK State Pension is taxable income.
HMRC typically deducts the value of your annual State Pension from your Personal Allowance. If you receive the full New State Pension (around £11,500 per year for 2024/25), this amount is subtracted from the £12,570 allowance represented by the 1257l tax code.
Example:
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Standard Personal Allowance: £12,570 (from the 1257l tax code base)
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Minus State Pension: -£11,500
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Remaining Tax-Free Allowance: £1,070
In this case, HMRC would assign a different code to your occupational pension or employment income, such as 107L, which reflects the remaining £1,070 of your tax-free allowance after accounting for the income tax on state pension.
This is a perfect example of why the 1257l tax code is often adapted to individual circumstances.
What Is the Difference Between Tax Code 1257L and 1250L?
As tax experts, we recognise that historical awareness provides vital context, especially when trying to understand your current 1257l tax code after years of employment.
A question that frequently arises is: What is the difference between tax code 1257L and 1250L?
The difference is purely a matter of the Personal Allowance set by the government for that tax year.
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Tax Code 1250L: This code was the standard Personal Allowance code for the tax years 2019/20 and 2020/21. It signified a tax-free allowance of £12,500 (1250 x £10).
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Tax Code 1257L: This code, introduced in 2021/22, signifies the current Personal Allowance of £12,570 (1257 x £10).
The fact that the Personal Allowance has been held at £12,570 for several years means that if you have had a stable employment situation, your 1257l tax code has likely remained consistent.
Understanding What is the difference between tax code 1257L and 1250L? is essential for checking P60s from prior years.
The stability of the 1257l tax code is part of the government’s fiscal policy concerning tax thresholds 2025 and beyond.
How to Check Your Tax Code and Identifying Errors
The most critical responsibility for any UK taxpayer is ensuring the accuracy of the tax code, whether it is the standard 1257l tax code or a modified variant. An incorrect code will inevitably lead to an underpayment or overpayment of tax.
How to Check Your Tax Code
The process of how to check your tax code is straightforward, but it must be done regularly. You will find your current tax code, which should ideally be the 1257l tax code if you have one simple job, in the following key documents:
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Your Payslip: This is the most current source. Look for the code displayed next to the period’s taxable income or your tax deductions.
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Your P45 (when starting a new job): This document shows the tax code from your previous employment.
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Your P60 (at year-end): This shows the tax code used for the entire tax year.
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HMRC’s Personal Tax Account: This online portal is the most reliable source. By registering, you can view your current and historic tax codes, details of any benefits HMRC knows about, and the calculation behind your current tax code 1257l or any modified code.
When and Why Your Tax Code Might Change
It is a natural part of financial life that your tax code 1257l will not always remain static. Understanding When and why your tax code might change is the first step in prevention.
Your 1257l tax code may change, or be replaced, due to several factors:
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Change of Employment: Starting a new job or having two jobs (which often results in one job using the 1257l tax code and the other using the br tax code).
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Taxable Benefits: Acquiring a company car, private healthcare, or other benefits. HMRC reduces your Personal Allowance (1257l tax code) to collect tax on these benefits.
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Claiming Expenses/Allowances: If you successfully claim tax relief on professional subscriptions or flat rate expenses, your allowance increases, turning your 1257l tax code into, for instance, a 1287L code.
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Receiving a State Pension: As discussed, income tax on state pension reduces your allowance, changing the number in your tax code 1257l.
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Income Exceeding £100,000: This triggers the removal of the Personal Allowance.
Why Is My Tax Code Wrong?
Understanding Why is my tax code wrong? is often the biggest hurdle. HMRC’s systems are complex, and errors, whilst rare, do happen.
Common reasons your code, even the standard 1257l tax code, might be incorrect include:
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Late P45/P46 Forms: If you start a new job and your previous employer was slow in processing your P45, the new employer might put you on an emergency code, which is rarely the standard 1257l tax code.
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Out-of-Date Records: HMRC might still believe you have a company car you returned a year ago, or they may be using an old figure for your income tax on state pension.
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Mixing up Multiple Jobs: If HMRC fails to assign your 1257l tax code allowance to your main job and instead applies the br tax code to your main income, you will be overpaying significantly. Conversely, if they apply the 1257l tax code to both jobs, you will be underpaying.
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Emergency Tax Codes: Codes ending in ‘W1’, ‘M1’, or ‘X’ are temporary. Seeing one of these when you expected the 1257l tax code means HMRC is still calculating your correct allowance.
How to Correct Your Tax Code
If you have confirmed that your code is not the correct 1257l tax code for your circumstances, you must act.
This is where the expertise of a Tax Advisor is invaluable, but the process of How to correct your tax code is also accessible directly through HMRC.
How to Correct Your Tax Code
The quickest and most efficient way to correct an incorrect tax code 1257l or replacement code is through your Personal Tax Account (PTA) on the Government’s official website.
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Access Your PTA: Log in to your HMRC Personal Tax Account.
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Identify the Error: Navigate to the section showing your current tax code and its calculation. If you expected the 1257l tax code but see a lower code, you can often see which benefit or untaxed income has caused the reduction.
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Update Your Details: You can typically update details, such as notifying HMRC that you have stopped receiving a benefit or correcting employment dates. For most simple corrections, HMRC will issue a new, corrected code (e.g., changing a br tax code back to the 1257l tax code allowance) to your employer almost immediately.
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Call HMRC: If the issue is complex, for example, if you are self-employed and employed, or if the calculation for your income tax on state pension seems wrong, you should call the HMRC Income Tax helpline. Have your National Insurance number, P60, and payslips handy.
Remember, a timely correction to your code, such as ensuring you have the 1257l tax code when entitled, means your employer will start deducting the right amount of tax immediately, potentially leading to a slight increase in your next pay packet as the under-allowance is smoothed out.
Does HMRC Automatically Refund Overpaid Tax?
This brings us to a crucial question that often follows a tax code error: Does HMRC automatically refund overpaid tax?
The short answer is yes, they usually do, but it depends on when the error is corrected and how the overpayment occurred.
In-Year Refunds (When the code, like the 1257l tax code, is corrected mid-year):
If you correct your code (e.g., replacing an unnecessary br tax code with the full 1257l tax code allowance) during the tax year, your employer will usually adjust your tax deductions automatically in subsequent months.
The PAYE system is cumulative, meaning it corrects the tax paid to date. This often results in a lump sum refund in your next pay slip or increased net pay for the remainder of the year.
Post-Year Refunds (After April 5th):
If the tax year has ended (April 5th) and you find you were on the wrong code (not the 1257l tax code you were entitled to), HMRC will review your tax position automatically:
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They issue a P800 form, which calculates your overpayment or underpayment.
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If you have overpaid, the P800 will instruct you how to check your tax code for next year and will also provide a link or phone number to claim your refund online or via bank transfer.
It is important to note, however, that while HMRC is generally proactive, delays can occur.
If you suspect an overpayment from a prior year due to a historically incorrect tax code 1257l, you can use the Personal Tax Account or fill out a form (such as the R38 form for tax relief) to prompt a review.
The key is to address Why is my tax code wrong? as quickly as possible.
Common Scenarios That May Affect the 1257L Tax Code
1. Changing Jobs
If you start a new job and don’t submit a P45, your new employer may use a temporary emergency tax code, leading to overpayment.
2. Receiving Two Incomes
If you have a second job or pension, HMRC may split your Personal Allowance or apply a BR or D0 tax code to the second income.
3. Claiming Marriage Allowance
Marriage Allowance lets you transfer £1,260 of unused Personal Allowance to your partner. Your tax code may then change to M or N (e.g., 1257M or 1257N).
1257L Tax Code for Self-Employed Individuals
The 1257L tax code does not apply to self-employed individuals who submit a Self Assessment tax return. Instead, they manually deduct the Personal Allowance when calculating taxable profits.
The Bottom Line
The 1257l tax code is the anchor of the UK’s PAYE system, representing the cornerstone of your tax-free allowance.
For the vast majority of taxpayers, the number ‘1257’ and the letter ‘L’ confirm entitlement to £12,570 of income free from tax for the 2024/25 period, subject to adjustments for tax thresholds 2025 in future budgets.
Your primary takeaway should be the importance of vigilance. Use the actionable steps provided on How to check your tax code, understand When and why your tax code might change, and know How to correct your tax code if you suspect a discrepancy.
Do not wait to see if Does HMRC automatically refund overpaid tax?, be proactive in your tax affairs. An accurate 1257l tax code is a sign of a well-managed financial life.
The content provided on TaxCalculatorsUK, including our blog and articles, is for general informational purposes only and does not constitute financial, accounting, or legal advice.
You can also visit HMRC’s official website for more in-depth information about the topic.
