A tax code is the short alphanumeric (eg. 543L) code that an employer uses to work out the correct tax to deduct from an employee’s gross pay.
More about tax codes:
Used for employees who are eligible for the basic personal tax allowance and also as an “emergency tax code”. This is the usual code for employee’s main (or only) job with straightforward tax affairs.
Used for people aged 65-74 who are eligible for the full Personal Allowance.
Used for people aged 65-74 who are eligible for the full Personal Allowance, the full Married Couple’s Allowance and are estimated to be basic-rate taxpayers.
Used for people aged over 75 and who are eligible for the full Personal Allowance.
Sometimes a tax code may have two letters and no numbers or be another combination:
This code is commonly used where it is an employee’s second job and the all their personal allowances are used in the first/main job. All income earned under a BR tax code will be taxed at basic rate.
An employee with this code has all their income taxed at the higher rate of tax. This is also commonly used with a second employment, where the first job uses up all the personal allowances and income taxable at the basic rate of tax.
An employee with this code has no tax deducted at all from their pay.
T at the end of a tax code indicates “temporary”, specifically that there may be items under review by HMRC.