If you are a UK employer running payroll, 1257L is one of the tax codes you are most likely to come across. For the 2026/27 tax year, 1257L normally means an employee is entitled to the standard £12,570 Personal Allowance. This is the amount of income they can usually receive before they start paying Income Tax.
However, 1257L is not the correct code to use for every employee. Tax codes can change because of second jobs, taxable benefits, unpaid tax or changes to an employee’s Personal Allowance. As an employer, it is not your responsibility to decide what an employee’s tax code should be. Your job is to use the correct code in payroll and update it when HMRC tells you to.
This guide explains what tax code 1257L means, how it affects PAYE, the different versions you may see and what you need to do when an employee’s tax code changes. For a wider overview, see Factorial’s guide to tax codes in the UK and learn what PAYE is in our complete guide.
What is tax code 1257L?
The 1257L tax code tells your payroll software how much tax-free income an employee should normally receive before Income Tax is deducted.
HMRC currently uses 1257L for most people who have one job or pension and no adjustments that change their standard Personal Allowance.
The code has two parts:
- 1257 relates to the employee’s tax-free allowance.
- L means the employee is entitled to the standard Personal Allowance.
A tax code is not the same as a tax rate. Instead, payroll uses the code alongside the employee’s taxable pay to work out how much Income Tax to deduct.
What does 1257L tax code mean?
The easiest way to understand 1257L is to look at the numbers and letter separately.
What does 1257 mean?
The numbers in most tax codes tell you how much tax-free income the employee can receive from that employment.
You usually multiply the number by 10:
1257 x 10 = £12,570
This means an employee with tax code 1257L can normally receive £12,570 of tax-free income during the tax year.
For 2026/27, HMRC gives the standard PAYE starting point as:
- £242 per week
- £1,048 per month
- £12,570 per year
Read about PAYE tax rates and thresholds to understand how much you owe.
What does the L mean?
The L means the employee is entitled to the standard tax-free Personal Allowance.
Other letters mean different things. For example:
- M means the employee has received part of their spouse or civil partner’s Personal Allowance through Marriage Allowance.
- N means they have transferred part of their allowance to their spouse or civil partner.
- S at the beginning means Scottish Income Tax rates apply.
- C at the beginning means Welsh Income Tax rates apply.
How much can an employee earn tax-free on 1257L?
An employee with tax code 1257L can normally receive £12,570 before Income Tax starts to apply.
Once their taxable income goes above their available Personal Allowance, Income Tax is calculated using the relevant tax bands.
For example, imagine an employee in England earns £30,000 during the year and has the full £12,570 allowance:
£30,000 – £12,570 = £17,430 taxable income
If all of this taxable income falls within the basic-rate band:
£17,430 x 20% = £3,486 Income Tax
This is a simplified annual example. Payroll calculations during the year also depend on factors such as how often the employee is paid, their earlier earnings and tax deductions, and whether their tax code is cumulative.
For 2026/27, according to GOV.UK the main employment Income Tax rates for England, Wales and Northern Ireland are 20%, 40% and 45%. Scotland uses different bands and rates.
For more help understanding the calculation, see Factorial’s guide on how to calculate UK payslips.
Is 1257L a 20% tax code?
The 1257L tax code itself does not determine the rate of tax an employee pays. Instead, the tax code determines how much income they can receive before paying Income Tax.
Once an employee’s taxable earnings exceed their available Personal Allowance, they pay tax according to the relevant tax bands.
This means someone with a 1257L tax code could pay some Income Tax at 20%, 40% or another applicable rate, depending on their income and where they pay tax in the UK.
Who normally gets tax code 1257L?
1257L is commonly used for an employee who:
- has one main job or pension
- receives the standard Personal Allowance
- does not have significant untaxed income being collected through their tax code
- does not have unpaid tax being collected through the code
- does not have taxable benefits reducing their allowance
HMRC describes 1257L as the code currently used for most people who have one job or pension.
However, employers should not automatically assign 1257L to every employee.
When somebody starts working for you, you normally use information from their P45 to work out the tax code to enter into payroll. If they do not have a P45, they may need to complete HMRC’s new starter checklist.
Why might an employee's 1257L tax code change?
Tax codes can change during the year when an employee’s circumstances change.
For example, HMRC may change a tax code because the employee:
- starts or stops receiving a taxable company benefit
- gets another job or pension
- has untaxed income
- owes tax from an earlier year
- becomes entitled to additional tax relief
- transfers or receives Marriage Allowance
- has a change to their Personal Allowance
HMRC starts with the employee’s Personal Allowance and can make adjustments for things such as untaxed income, company benefits and other amounts that need to be collected through PAYE.
What happens for higher earners?
The standard Personal Allowance starts to reduce when someone’s adjusted net income goes above £100,000. It reduces by £1 for every £2 of income above £100,000 and can eventually fall to zero.
An employee with a high income may therefore have a different tax code even if they only have one job.
Common 1257L tax code variations
You may see several versions of 1257L when processing payroll.
The extra letters or numbers are important because they can change how payroll calculates the employee’s tax.
| Tax code | What it means | When it is commonly used |
|---|---|---|
| 1257L | Standard tax code with a £12,570 Personal Allowance. | Many employees with one job or pension and no additional adjustments. |
| 1257L W1 | Week 1 emergency code. Tax is calculated using the current week rather than cumulatively. | Often used temporarily when complete tax information is not available. |
| 1257L M1 | Month 1 emergency code. Tax is calculated using the current month only. | Common for monthly-paid employees when tax information is incomplete or being updated. |
| 1257L X | Another way of showing a non-cumulative emergency tax code. | Used when tax needs to be calculated without fully considering previous pay periods, including where pay dates vary. |
| 1250L | An older standard tax code based on a £12,500 Personal Allowance. | May appear on documents from previous tax years. |
| 1263L | An L code giving around £12,630 of tax-free income through that employment. | May apply where HMRC has made an individual adjustment that increases the employee’s tax-free allowance. |
The exact reason for an individual code such as 1263L depends on HMRC’s calculation. Marriage Allowance, for example, is normally shown with an M or N suffix, rather than simply changing 1257L to another L code, which you can read more about on GOV.UK.
Is 1257L an emergency tax code?
The standard 1257L code is not an emergency tax code. According to HMRC, a code becomes an emergency or non-cumulative code when it ends in:
- W1
- M1
- X
- or sometimes NONCUM in payroll software.
For 2026/27, HMRC lists 1257L W1, 1257L M1 and 1257L X as the emergency codes. Emergency codes calculate tax using the employee’s pay for the current week or month rather than fully considering their earlier pay and tax for the year.
Is 1257L cumulative?
Plain 1257L normally works on a cumulative basis, meaning payroll takes the employee’s pay and Income Tax from earlier in the tax year into account.
For example, if an employee paid too much tax earlier in the year, a later cumulative PAYE calculation may help correct the difference.
Codes ending in W1, M1 or X work differently because they calculate tax using the current pay period rather than the employee’s full year-to-date position.
What do S1257L and C1257L mean?
You may also see tax codes such as S1257L and C1257L.
The extra letter at the beginning tells payroll which country’s Income Tax rules to apply.
| Tax code | What it means |
|---|---|
| 1257L | Standard allowance without a Scottish or Welsh prefix |
| S1257L | Scottish Income Tax rates apply |
| C1257L | Welsh Income Tax rates apply |
An S code is used for an employee whose main home is in Scotland, while a C code applies to a Welsh taxpayer.
What happens if an employee has more than one job?
An employee only gets one Personal Allowance for each tax year, even if they have more than one job, pension or other source of income.
This means an employee might have:
- 1257L on their main job
- BR on their second job
BR generally means all income from that employment is taxed at the basic rate.
Depending on the employee’s total income, they could instead have a code such as D0 or D1 on another job.
Employers should not try to divide the employee’s Personal Allowance themselves. Use the code you receive through PAYE.
How do employers get an employee's tax code?
When you hire somebody, you normally use their P45 form to set up their tax information.
The P45 includes details such as:
- the employee’s existing tax code
- pay and tax already recorded during the tax year
- their National Insurance number
- their previous leaving date
HMRC says employers usually use the P45 to work out the new employee’s tax code and starter information.
What should employers do when a tax code changes?
HMRC can send you a new employee tax code during the tax year.
A tax code notice is sometimes called a P6.
When you receive one, you should:
- Check which employee the new code applies to.
- Update their tax code in your payroll system.
- Add any previous pay and tax figures HMRC provides with the notice.
- Use the new information when you next process their pay.
HMRC tells employers to update the payroll record as soon as possible and before the employee’s next pay.
What should you do if an employee says their tax code is wrong?
An employee may notice a different code on their payslip and ask payroll to change it. Your first step is to check that you are using the latest tax code supplied by HMRC.
HMRC can help review information such as:
- current employments
- estimated income
- taxable benefits
- pensions
- other information affecting their allowance
HMRC will issue an updated code for you to use when necessary.
As an employer, your role is to apply the correct HMRC code, not decide what the employee’s tax allowance should be. Employees can also use HMRC’s tax code checker to understand what their code means.
Where can employees find their tax code?
Employees can normally find their tax code on their:
- payslip
- P45
- P60
- HMRC tax code notice
- Personal Tax Account
- HMRC app
The tax code shown on a payslip tells the employee which code you used to calculate their Income Tax for that pay period.
Factorial’s payslip guide covers the other information employees may see on their payslip.
The employee’s final tax code for the tax year will also appear on their P60. See our guide to what is a P60 form for more information.
Keep payroll information organised with Factorial
Factorial is an AI business management platform that brings HR, finance and IT together in one place. You can use Factorial to keep employee information organised, centralise payroll changes and make it easier for HR and finance teams to work from the same records.
Payroll software and HMRC still determine how Income Tax is calculated. But keeping the information behind payroll accurate and up to date can help you apply tax codes correctly and spot problems before payday. Request a free demo of Factorial to see how it can help your organisation and receive a personalised quote tailored to your needs!
FAQs about tax code 1257L
The 1257L tax code is the standard code for many employees who receive the full £12,570 Personal Allowance. Whether it is the right code for a particular employee depends on their own income and tax circumstances.
The amount of tax an employee pays on 1257L depends on their taxable income and the Income Tax bands that apply to them. The code normally gives them £12,570 of tax-free income rather than setting one specific tax rate.
The standard 1257L code is not an emergency code, but versions ending in W1, M1 or X are emergency or non-cumulative codes.
A tax code can change because of another job, taxable benefits, unpaid tax, additional income or changes to the employee's Personal Allowance. HMRC may update the code when the information it holds about the employee changes.
1257L normally takes account of pay and tax across the tax year, while 1257L M1 calculates tax using the current month without fully considering earlier pay periods. This makes 1257L M1 an emergency or non-cumulative code.
