Understanding your employees' tax codes
What the numbers mean
The numbers in an employee’s tax code show how much tax-free income they get in that tax year.
You usually multiply the number in the tax code by 10 to get the total amount of income they can earn before being taxed.
For example, an employee with the tax code 1257L can earn £12,570 before being taxed. If they earn £27,000 per year, their taxable income is £14,430.
The process is different if the employee has the letter ‘K’ in their tax code.