Tax Code K Explained: What It Means, Why You Have It and What It Costs

What a K tax code means

Most tax codes subtract tax-free pay from your salary. A K code does the opposite: HMRC says you have income or tax to pay that is worth more than your tax-free allowance, so the code's number is added to your taxable income instead.

The number works like any other code, multiplied by ten. K475 means £4,750 is added to your taxable pay for the year; K100 means £1,000. Because the money is being collected rather than given, and no Personal Allowance is applied on top, a K code can leave you with noticeably less take-home pay than a standard 1257L. Our tax codes guide shows how every code is built, and what is my tax code covers where to find yours.

Why you might be on a K code

A K code appears when HMRC needs to collect tax through your salary on money that didn't have tax taken from it at source. The usual reasons are:

• Tax you owed for a previous tax year that HMRC is collecting through your code rather than as a separate bill.
• Income above your tax-free allowance that isn't taxed at source, such as a State Pension or taxable savings and investment income.
• Taxable company benefits, such as a car or private medical insurance, that take your untaxed total past your allowance.
• A Marriage Allowance adjustment or another correction that has pushed your deductions past zero.

How much tax a K code takes

There is no separate Personal Allowance left in a K code: HMRC has already netted your allowance against the untaxed income when it set the number, so what remains is simply added on top of your pay. Take K475 on a £30,000 salary: £4,750 is added, making £34,750 taxable for the year, taxed at 20% for £6,950. The same salary on a standard 1257L code costs £3,486, so the K code takes £3,464 more, about £289 a month.

The gap widens once pay passes the £50,270 higher-rate threshold, because the added amount pushes more of your salary into the 40% band.

There's a limit: half your pay

A K code cannot take more than half your pre-tax pay or pension. GOV.UK spells this out for employers, so even the largest code can only collect so much through payroll. The biggest K code is K1257, which would add the full £12,570 allowance to your taxable pay.

If the tax HMRC wants is bigger than half your pay can carry, it doesn't vanish. HMRC normally collects the rest another way, such as a direct bill or an adjustment in a later year.

Is a K tax code bad?

Not by itself. A K code isn't a fine or a penalty; it's a repayment plan for tax you owe or tax on income you've received untaxed. Spreading last year's underpayment through your code is usually the easiest way to pay it, because there's no lump sum and no interest while the schedule runs.

It only becomes a problem when the reason behind it is wrong. If the code assumes untaxed income or a debt that isn't yours, every payslip takes money you don't owe until the code is corrected, so it's worth checking the breakdown rather than ignoring the code.

Check your code and get it changed

Your Personal Tax Account or the HMRC app shows how each of your codes has been worked out, and a Tax Code Notice (P2) letter lists the items behind a K code line by line. Compare that list with reality: a State Pension you don't receive, a benefit that ended or a debt you've already paid should not still be in the calculation.

If the code is wrong, update your details in HMRC's tax code service or contact HMRC directly; HMRC aims to issue a corrected code within 35 days of being told. If the K code is collecting a previous year's debt and it's stretching you, ask HMRC about spreading it over more of the year or into the next tax year. Any tax you overpaid comes back through your pay once the corrected code reaches your employer. The tax code FAQ answers the common follow-ups, and why has my tax code changed explains how codes move between years.

Work out your own figures

Enter your K code and salary into the tax code calculator to see the tax for the year and for each payslip. For the whole picture including National Insurance and pensions, use the take-home pay calculator, or compare salaries on our £30,000 after tax page.