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K Tax Code Explained (+ What To Do If It’s Wrong)

What Does the Tax Code K Mean?

The K tax code means that you:

  • have income that is not being taxed elsewhere or
  • owe tax to HMRC which adds up to more than your personal allowance and your employer is taking this debt directly from your payslip.

** the personal allowance for 2023-24 is £12,570

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

K Tax Code Explained

The most common reason for the K tax code is that an individual owes tax from previous years for example if they are employed and self-employed. Another reason is that an individual is receiving taxable state benefits outside of their employment such as a pension or the individual is in receipt of company benefits.

An employer or pension provider cannot take more than half of someone’s gross wages or pension with the tax code K.

How is a K Tax Code Calculated?

HMRC will work the tax code by adding the amount of untaxed income or tax debt to an individual’s gross salary. The amount of untaxed income will become the tax code, with the last digit removed.

K Tax Code Example

The tax code K700, for example, means someone has untaxed income of £7,000 being added to their gross salary for the tax year. If the individual is being paid monthly, £583.33 (£7,000 ÷ 12) will be added to their monthly gross pay.

What to Do If You Are on a K Tax Code Wrongly

It’s always worth double-checking your tax code because HMRC can make changes by mistake or don’t know about changes in your personal circumstances. If you think you are on the wrong tax code, then first speak to your employer and check what paperwork they have received from HMRC. You should have received a copy of the same paperwork, but it may not have arrived. So they may be able to shed some light on the situation.

Employers are unable to make changes to tax codes unless instructed by HMRC so they will only be able to give you limited help. The best thing to do is to contact HMRC by phone on 0300 200 3300. Alternatively, you can use their income tax service online by logging into (or setting up) your personal tax account to notify them that you believe you are on the wrong tax code.