Tax code 1257L is the most common code in the tax year 2025/26 for those with only one job. How much tax is payable with a 1257L tax code?
In the Spring Statement 2025 it was confirmed that the personal allowance will be frozen until at least 2028.
Most taxpayers will receive an updated tax coding notice from HMRC between January and March each year.
Your tax code is important as it is used to calculate how much tax you will pay.
The personal allowance is the amount a UK taxpayer can earn tax free. For the tax year 2025/26 the personal allowance remains at £12,570.
HMRC convert the personal allowance of £12,570 and turn it into tax code 1257L. They drop the last digit which gives 1257. The letter L is then added if you are entitled to the standard personal allowance. As a result, the tax code is 1257L.
Therefore if you have a tax code 1257L it means that you can earn £12,570 before you pay income tax.
With a tax code 1257L your tax free total is £12,570 per annum. This is spread over the course of the year so that your weekly allowance would be £241. If paid monthly it would be £1,047.
Earnings in excess of this are taxed at 20%. This is for earnings between £12,571 and £50,270. (Tax Year 2025/26)
After this it increases to 40% for earnings between £50,271 and £125,140. (Tax Year 2025/26)
Earnings over £125,140 are then taxed at the highest rate which is 45%. (Tax Year 2025/26)
n.b Scotland has introduced its own tax rates which are slightly different to those stated above.
There are numerous allowances which can affect your tax code.
As an example we pay Chartered Accountancy subscriptions annually to the Institute of Chartered Accountants (ICAEW). For illustration purposes let us say this cost is £500.
This is an allowable expense and is therefore added to the tax free personal allowance. This results in a tax free allowance of £13,070.
HMRC would convert this allowance into the tax code 1307L.
List of HMRC approved subscriptions
Benefits received work in a similar way to allowances. The most common deductions being benefits provided by an employer.
As an example let us say that the Chartered Accountant from the previous example also has medical benefit of £380. They also receive a car benefit totalling £6,000.
The tax code would be 669L. The tax free allowance has been reduced down to £6,690.
(The calculation is £12,570 + £500 – £380 – £6,000 = £6,690)
Your tax code informs your employer how much tax free income you are entitled to receive. An incorrect tax code will result in the incorrect tax being paid.
With tax code 1257L you are entitled to £12,570 tax free per annum. This spread monthly is £1,047.
With our adjusted tax code above of 669L the tax free amount is only £6,690 per annum. This spread monthly is £557.
Earnings over the tax free amount are taxed at 20%. Therefore the employee on tax code 669L is paying an additional £98 PAYE every month compared to the employee on tax code 1257L.
HMRC send PAYE coding notice (P2) out in January to March each year. The document not only states your tax code but it also explains any adjustments they have made if you don’t have tax code 1257L.
If you haven’t received a P2 you can create a personal tax account or phone HMRC on 0300 200 3300.
Alternatively you can wait until you receive your payslip but this will only tell you the code. It won’t explain what adjustments have been made (if any).
Tax code 1257L will be correct for the majority of employees. Typically those with just one employment with no benefits or tax deductible allowances will have a correct tax code. However the tax coding system can quickly go wrong. Typical examples include:
• A change of jobs, having more than 1 job, starting, leaving or retiring in the year
• Having more than 1 source of income such as a job and a pension
• Changes to tax deductible allowances e.g paying professional subscriptions
• Changes to taxable benefits e.g being provided with a company car for private use
If you believe your tax code may be incorrect you should contact HMRC on 0300 200 3300. Contacting HMRC immediately will minimise the tax error so don’t delay.
Other ways to contact HMRC about an incorrect tax code can be found using the following link – Contact HMRC
Historically, personal allowances have increased by a small amount each year. As a result, the tax code usually increases by a small amount. It is only recently that personal allowances have been frozen at £12,570.
2024/25 Tax year – 1257L
2023/24 Tax year – 1257L
2022/23 Tax year – 1257L
2021/22 Tax year – 1257L
2020/21 Tax year – 1250L
2019/20 Tax year – 1250L
See our blog on UK Tax Codes Explained? It is a simple guide on all of the various tax codes issued in the UK.
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