Tax Code · 2026/27
K Tax Code: Negative Allowance UK 2026/27
A K-prefix tax code (e.g. K475) means your taxable deductions exceed your Personal Allowance. The number represents extra taxable income added to your pay, not a tax-free amount.
What the K tax code means
A K-prefix code inverts the usual tax code logic. Where 1257L subtracts £12,570 from your pay before tax, K475 adds £4,750 to your pay as additional taxable income. HMRC uses it when your deductions — untaxed benefits, state pension exceeding PA, unpaid tax from prior years — are larger than the £12,570 PA, leaving a net negative allowance.
The code ensures tax is collected evenly through PAYE rather than hitting you with a single self-assessment bill. Spreading it across the year smooths cash-flow and avoids underpayment penalties.
The K number is the *negative* allowance divided by 10. So K475 means £4,750 of notional extra taxable income added to actual pay for the purpose of calculating Income Tax each pay period.
When you'll see K
- You receive substantial company benefits (expensive company car, private medical, rent-free housing) that HMRC collects tax on through PAYE rather than self-assessment.
- You receive State Pension above the £12,570 PA and continue working — the excess creates negative allowance on your employment code.
- HMRC is recovering unpaid tax from a previous year via your current code.
- Multiple state or employer benefits combining to exceed your £12,570 PA.
What to do if you have a K code
- Check HMRC's tax code notice (letter or Personal Tax Account entry) to see exactly which deductions make up the K value.
- If any of the deductions look wrong — e.g. benefits you no longer receive, or tax arrears already paid — contact HMRC on 0300 200 3300 to update.
- HMRC caps deductions at 50% of each pay cheque. If your K code would theoretically take more than half your salary in a single period, the overflow is carried forward.
Worked example
K200 on a £40,000 salary. The K value adds £2,000 of notional income, so Income Tax is calculated on £40,000 + £2,000 = £42,000 taxable (no PA). Tax: 20% × £42,000 = £8,400. Without the K adjustment, tax on the same £40,000 with 1257L would be 20% × £27,430 = £5,486 — the K code collects £2,914 extra to cover the benefits/debt.
Want to see the numbers for your own salary? Use the salary calculator and pick 2026/27 to see how K interacts with your full take-home.
Frequently asked questions about K
- Why is HMRC adding income I don't actually get?
- They're not adding real income - they're adjusting the PAYE calculation so the tax on your untaxed benefits (e.g. a company car) or tax debts gets collected through your payslip. You still only receive your actual salary; the K code just alters the tax calculation.
- Does the K prefix work in Scotland?
- Yes, Scottish taxpayers with a K code typically see SK-prefix (e.g. SK475). The negative-allowance mechanism is identical; only the Scottish tax bands above apply for the rate calculation.
- Can my K code change?
- Yes - it updates when your benefits change (e.g. you give back the company car), when HMRC collects the prior-year arrears, or when you update your details through the Personal Tax Account.
- What's the 50% rule?
- HMRC caps K-code deductions at 50% of any single pay cheque. Anything over that is postponed to the next period or to self-assessment, so your take-home never drops below half of gross from this deduction alone.
Related tax codes
- 1257L
1257L is the default UK tax code for 2026/27. It gives you the full £12,570 Personal Allowance before Income Tax is deducted - the number 1257 is your allowance divided by 10, and the L means a standard untouched allowance.
- BR
BR stands for 'Basic Rate'. It taxes 100% of pay from that source at 20%, with no Personal Allowance. HMRC uses it most often on second jobs and pensions, where your £12,570 PA is already used up by the main income.
- NT
NT stands for 'No Tax'. Your employer or pension provider deducts zero Income Tax at source — unusual, and usually tied to a specific reason.
- 0T
0T (zero-T) gives you no Personal Allowance. Tax is calculated on every pound of your pay using the normal bands — 20%, 40%, 45% — as if your whole income is taxable.
Sources & further reading
All figures and definitions on this page reflect the 2026/27 UK tax year and are cross-checked against HMRC guidance.
- HMRC — What your tax code means (official meanings for L, BR, D0, D1, K, 0T, NT, M, N, S, C, T)
- HMRC — Income Tax rates and Personal Allowance (2026/27 bands and thresholds)
- HMRC — Emergency tax codes (W1, M1 and X suffixes)
- HMRC — Rates and thresholds for employers 2026 to 2027
- HMRC — Your Personal Tax Account (check your current code and how it was calculated)
- Our methodology & calculation sources →