What is Tax code?
A tax code is issued by HMRC and used by the employer's payroll to work out how much Income Tax to deduct. The number reflects the employee's tax-free personal allowance; the letter reflects their situation.
The standard 2026/27 code is 1257L, meaning £12,570 of tax-free pay. Codes change after benefits in kind, a second job or under/overpayments; an emergency code applies when information is missing.
In practice
Code 1257L spreads £12,570 of allowance across the year, so roughly £1,047 of each month's pay is tax-free before Income Tax applies.