HMRC is still issuing tax code changes following the end of the last tax year and the first months of the 2026-27 tax period. One clear sign that your tax code has been altered to recover underpaid tax is the appearance of the letter K on your payslip.
Taxpayers are advised to check their payslips carefully in the coming months, as HMRC may change your tax code to collect unpaid tax, particularly after banks report savings interest and online marketplaces report earnings directly to HMRC.
What your tax code means
Your tax code, usually at the top of your payslip, determines how much tax you pay and your tax-free personal allowance. A standard code is 1257L, giving a £12,570 tax-free allowance. The L indicates entitlement to the standard allowance.
Other codes include BR (emergency tax code, often for new jobs) and N (transferring some allowance to a spouse).
K code explained
Tax experts at the Low Incomes Tax Reform Group (LITRG) say a K code means you likely owe tax, leading HMRC to cut your personal allowance to recover it.
They said: “K codes are a type of tax code that will result in more tax being collected out of your wages, via the PAYE system.”
They added: “If your tax code has recently changed to a K code – or you have noticed any other change to your code that has resulted in a significant decrease to your take home pay - it may be that HMRC are trying to collect debts, like tax return late filing penalties, from you via your tax code.”
They noted: “You should be able to tell if you have a K code by looking on your most recent payslip. In a K code, the descriptive letter is placed in front of the tax code number, for example, K784, rather than after it, such as in the standard 1257L code.”
If you don't know why a K code has appeared, LITRG advises contacting HMRC as soon as possible.
HMRC's guidance
HMRC says about the K code: “Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance. For most people, this happens when you’re: paying tax you owe from a previous year through your wages or pension; getting benefits you need to pay tax on - these can be state benefits or company benefits.”
