Is Your Payslip Wrong? What 'BR', '0T', and '1257L' Mean
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| Is Your Payslip Wrong? |
You just started a new job. You open your first payslip, excited to see your earnings. But the amount is lower than you expected. You look at the "Tax Code" box and see two letters: BR.
You assume HR knows what they are doing. Big mistake.
Millions of UK employees are on the wrong tax code, overpaying the government by hundreds or thousands of pounds every year. If you don't spot it, HMRC won't always tell you.
The Gold Standard: 1257L
First, let's establish what "Normal" looks like. For the 2025/26 tax year, the standard tax code for most people is 1257L.
- 1257: This represents your Personal Allowance (tax-free income) of £12,570 (Frozen until 2028).
- L: This means you are entitled to the standard tax-free allowance.
If you see 1257L, you are generally safe. It means you can earn £12,570 before paying a penny of Income Tax.
(Note: If you live in Scotland, you will see S1257L. If in Wales, C1257L. This indicates you pay Scottish or Welsh income tax rates.)
The "Emergency" Codes (The Danger Zone)
If you see any of the following codes, alarm bells should ring. You are likely being taxed on every single pound you earn, with zero tax-free allowance.
⚠️ Codes That Cost You Money
- BR (Basic Rate): You are paying 20% tax on EVERYTHING. Usually happens if you have a second job or didn't hand in your P45.
- 0T (Zero Tolerance): You have NO Personal Allowance. This is often worse than BR because if you are a high earner, you'll pay 40% immediately.
- D0: You are paying 40% Higher Rate tax on everything (usually for second jobs of high earners).
- M1 / W1: This means "Month 1" or "Week 1". Your tax is calculated only on this pay period, not cumulatively. You might overpay if your income fluctuates.
💰 The Cost of 'BR' (Example)
Let's say you earn £2,000 a month.
- Correct Code (1257L): You pay tax only on the amount above ~£1,048. Tax = approx £190.
- Wrong Code (BR): You pay 20% on the full £2,000. Tax = £400.
Result: You are losing £210 every month. Over a year, that is £2,500 gone.
Why Does This Happen?
HMRC is not malicious; they are just overwhelmed. The most common reasons for a wrong code are:
- Changing Jobs: Your new employer didn't receive your P45 from your old boss in time, so they put you on an "Emergency Code."
- Company Benefits: You used to have a company car, but you gave it back. HMRC thinks you still have it and keeps reducing your allowance (e.g., Code 900L).
- Side Hustles: HMRC assumes your second job is your main job and applies the wrong allowances.
The "Marriage Allowance" Boost (M and N)
Not all letter changes are bad. If you see an M or N, it might mean you are saving money.
- M: You have received 10% of your partner's allowance (Marriage Allowance).
- N: You have transferred 10% of your allowance to your partner.
If you are married and one of you earns under £12,570, applying for Marriage Allowance can save you £252 a year in tax.
How to Fix It (And Get Your Cash Back)
The good news is that fixing this is easy, and the refund is usually fast.
- Check your Payslip: Look at the code right now.
- Log in to "Personal Tax Account": Go to GOV.UK or download the HMRC App. It is much faster than calling. You can see exactly how HMRC calculates your code.
- Update Your Details: Tell them: "I left my old job on this date" or "I no longer have a company car."
- Wait for the Refund: HMRC will either adjust your next payslip (so you pay almost zero tax next month) or send you a cheque/bank transfer.
Conclusion
Your employer cannot change your tax code; only HMRC can.
Don't yell at your HR department. Log in to the HMRC app or call them (0300 200 3300) early in the morning. That "BR" code is not a badge of honor; it is a hole in your pocket. Stitch it up today.
Disclaimer: This article is for informational purposes only. Tax codes depend on individual circumstances (including residence in Scotland/Wales). Income tax bands and allowances are subject to government change. Verify all information via your Personal Tax Account on GOV.UK.
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