The MSE founder is urging people to check as soon as possible, as “it could cost you £1,000s”
Martin urged employees to check now (Image: BBC)
Martin Lewis has issued an urgent ‘check now’ tax code alert to people working in the UK who are earning more than £12.570 a year, as he says “it could cost you £1,000s”. The alert was issued by the Money Saving Expert founder on his BBC Sounds podcast show.
A UK tax code consists of a mix of numbers and letters that HM Revenue and Customs (HMRC) uses to inform your employer or pension provider about how much income tax to take from your salary or pension. It shows how much money you can earn without paying tax for the year.
In the UK, you begin to pay Income Tax once you exceed your Personal Allowance, which is £12,570 for most people in the 2025/26 tax year. This means you will pay a 20% tax (Basic Rate) on any earnings from £12,571 to £50,270, and higher rates will apply to any earnings beyond that.
In an urgent call to action for millions of people across the UK, Martin Lewis asked listeners to check their tax code ‘as soon as possible’ because he warns many could be wrong. He said: “Do you know what your tax code is? If you’re an employee, you need to because millions of them are wrong each year. And if they are wrong, legally, it’s your responsibility, not your employers and not HMRC’s to ensure that it’s correct.”
He went on to explain what people need to look out for. “Now, a typical tax code is 1257L. Take those numbers, the 1257, add a zero to the end, so you’ve now got £12,570. That’s how many pounds you can earn each year before you have to start paying income tax”, he said.
“So, that’s a standard tax-free allowance of £12,570 a year. The L, or the letter, is the different category of tax that you’re in. Now I say millions of them are wrong, and they are, and think about the impact of that. It could mean you’re paying far too much tax each year. You don’t want that.”
It’s important to look at your tax code because if it’s wrong, you might end up paying either too much or too little income tax. This can cause surprise tax bills or late refunds, and mistakes happen often because of things changing, like having more than one job or getting benefits.
Your employer uses this code to take out tax from your paycheck, so checking it makes sure you’re paying the right amount. This way, you can avoid owing money or losing out on your tax-free allowance.
Martin Lewis continued: “It could also mean you’re paying too little tax. Sounds good? It isn’t. Because at some point they will catch up and make sure you pay the tax that you owe. So, you could be hit, slapped across the face with a big tax bill and not have the cash to pay it, which is a nightmare.”
Urging people to always check their tax code, he concluded: “So, each year when you get your tax code, you should check it, and if you’ve never checked it before, it’s worth going and finding it now and doing a check. There are free tax code calculators online that will help you do so.”
Tax codes can change when things happen in your life, like getting a new job, receiving benefits, having a pension, or using the Marriage Allowance. You have to make sure it matches your current situation. HMRC might make mistakes, so it’s up to you to check that the information they use to calculate your code is correct.
Common codes and letters
You can find your tax code on your payslips and on letters or emails from HMRC. You can also find it in your Personal Tax Account on the GOV.UK website.
- L: You’re entitled to the standard personal allowance (e.g., 1257L).
- M or N: Used for the Marriage Allowance, transferring part of a partner’s allowance.
- K: Used when you have untaxed income or benefits that exceed your allowance (e.g., K475), adding to your taxable income.
- BR, D0, D1: Codes for different tax rates.
- W1, M1, X: Temporary emergency tax codes, often used when starting a new job, which are updated later.
