K tax codes

A K code is a tax code with the letter K in front of the number, such as K143. It means you have untaxed income, benefits or tax owed that add up to more than your Personal Allowance. Instead of giving you tax-free pay, payroll adds an amount to your taxable pay so the extra tax can be collected through your wages or pension. K codes are less common than L codes, but people with a State Pension and a job, or with a large benefit in kind, do get them.

How the number works

With a normal code such as 1257L, the number is tax-free pay: £12,570 spread across the year. A K code reverses that. Multiply the number by ten and you have the amount added to your taxable pay over the year.

Say HMRC needs to tax £14,000 of income that has no tax taken at source, and your allowance is £12,570. The deductions exceed the allowance by £1,430. Your code would be K143, and payroll would add about £1,430 a year (around £119 a month) to the pay it taxes.

K codes take the same S or C prefix as other codes for Scottish or Welsh taxpayers (SK143, CK143), and can be cumulative or emergency (K143 M1).

Why HMRC gives K codes

State Pension alongside a job or another pension

The State Pension is paid with no tax deducted. HMRC collects the tax by reducing the allowance on your job or workplace pension. The full new State Pension is £241.30 a week, about £12,548 a year, which is nearly the whole Personal Allowance. Add any other untaxed income or benefits and the code can tip into a K.

This is common for public sector staff who have reached State Pension age and carry on working part-time, or who draw an NHS, teachers’ or local government pension alongside the State Pension. The State Pension guide covers when it starts.

Benefits in kind

Taxable benefits from your employer, such as private medical insurance or a car that is not provided through an exempt scheme, are given a cash value and taken off your allowance. A senior post with several benefits can push the total past £12,570.

Tax owed from an earlier year

HMRC often collects tax underpaid in an earlier year by reducing this year’s allowance. Combined with anything else, that can produce a K code. See underpaid tax and tax code adjustments.

Untaxed income from elsewhere

Rental profit, self-employed income and large amounts of savings interest are normally dealt with through Self Assessment. HMRC sometimes collects smaller amounts through your code instead.

The limit on deductions

A K code can produce a lot of tax in one pay period, so there is a legal cap on how much tax payroll can take from a single payment. If the cap stops HMRC collecting everything due through the code, the shortfall is carried forward or collected another way, such as through Self Assessment. HMRC’s guidance on gov.uk sets out the current limit, and your payroll software applies it automatically.

What to check

A K code is only as good as the figures behind it. Sign in to your HMRC personal tax account or the HMRC app and look at how the code was worked out. Check that:

• the State Pension figure matches your award letter for this tax year
• the value of each benefit in kind matches what your employer reports (your P11D or payrolled benefits figure)
• any underpayment being collected is one you recognise and agree with
• the estimated income from each job or pension is roughly right.

HMRC lists these as allowances and deductions. If a benefit has stopped (you have handed back a car, or left the medical insurance scheme), tell HMRC. Otherwise the deduction stays in your code and you keep paying tax on it.

Fixing a wrong K code

Contact HMRC through your personal tax account or by phone. Payroll cannot change the code and can only apply the one HMRC sends. Once a corrected code arrives, a cumulative code adjusts your tax from the start of the tax year, so any overpayment is refunded through payroll.

Complicated affairs (several pensions, rental income, or both a K code and Self Assessment) are worth raising with HMRC, who can explain how the figures fit together. Independent help comes from organisations such as TaxAid and Tax Help for Older People, or from a qualified tax adviser. For a fuller reading of every part of your code, see tax codes explained.