---
title: What is a Tax Code?
description: A tax code is a short combination of numbers and letters used by your employer or pension provider to work out how much Income Tax to take from your pay. HMRC sends your tax code to your employer, and it…
url: "https://microentityaccounts.com/knowledge-hub/what-is-a-tax-code/"
updated: "2026-02-22"
category: Accounting
---

# What is a Tax Code?

A tax code is a short combination of numbers and letters used by your employer or pension provider to work out how much Income Tax to take from your pay. HMRC sends your tax code to your employer, and it is also shown on your payslip. The number indicates your tax-free personal allowance, and the letter indicates your situation — for example, L means you are entitled to the standard personal allowance, M means you have received the Marriage Allowance transfer, and BR means all your income from that source is taxed at the basic rate. If you think your tax code is wrong, you should contact HMRC straight away to avoid paying too much or too little tax.