What is a PAYE Coding Notice?

A PAYE Coding Notice is HMRC's annual recalculation of your tax position. The notice tells your employer which tax code to use from 6 April onwards (the start of the new UK tax year). The notice shows the personal allowance for the new tax year. The notice shows any underpayment or overpayment from the previous year that HMRC has added to the new code. The notice arrives by post or via your personal tax account on gov.uk in late January or February each year. If you do not receive a notice by mid-March, log into your personal tax account to check whether the notice has been issued.

When does HMRC send the PAYE Coding Notice?

HMRC sends the PAYE Coding Notice in late January or February each year, for the new tax year that starts on 6 April. The notice must reach you before 6 April so your employer can apply the new code from the start of the new tax year. If you have moved address in the last year, the notice may go to your old address. The most useful action is to log into your personal tax account on gov.uk in mid-March and check whether the notice has been issued. The personal tax account shows the same notice as the post.

What if the personal allowance on the notice looks wrong?

The personal allowance on the PAYE Coding Notice should match the announced figure for the new tax year. For 2027/28, the figure is confirmed in the Autumn Budget 2026 on Wednesday 28 October 2026. If the personal allowance on the notice differs from the announced figure, log into your personal tax account on gov.uk and check whether the notice has been updated. If the personal tax account shows the correct figure, the discrepancy is a timing issue (HMRC sends the notice based on the previous Autumn Budget figure; the personal tax account updates with the new figure). If the personal tax account also shows the wrong figure, call HMRC to query.

What if the previous year underpayment looks too high?

The most useful action is to check the income sources on your personal tax account on gov.uk. Each employment, each pension, and each benefit in kind should match the actual income for the year. If a source is missing or the income figure is wrong, the underpayment calculation will be wrong. Update the personal tax account with the correct figures. The corrected underpayment will arrive in a revised PAYE Coding Notice within 4 to 6 weeks. If the personal tax account shows the correct figures and the underpayment still looks too high, call HMRC to query. The query can take 4 to 8 weeks to resolve.

How do I update the personal tax account?

Log in to gov.uk/personal-tax-account with your Government Gateway user ID (the same login you use for the State Pension forecast on gov.uk/check-state-pension). The personal tax account shows your current tax code, your year-to-date income for each source, your expected income for the current tax year, and any underpayment or overpayment from previous years. To update the income sources, click 'Income Tax' then 'View your income' and follow the prompts. To update the tax code, click 'PAYE Coding Notice' and follow the prompts. Updates typically take 4 to 6 weeks to apply to your employer's payroll.

How long does HMRC take to issue a revised code?

HMRC typically issues a revised PAYE Coding Notice within 4 to 6 weeks of an update to the personal tax account or a phone query. The revised notice is sent to your employer automatically. The revised code applies from the next available pay packet, which is usually 1 to 2 pay cycles after the employer receives the notice. The total time from personal tax account update to revised take-home is usually 6 to 10 weeks. The most useful action during the wait is to budget for the higher tax position; the refund or revised code will arrive when HMRC has processed the change.

Educational use only. Not financial, investment, tax or legal advice.

24 November 2026 Syd Lawrence5 min read

January Tax Code Change: Why Your Take-Home Just Moved

Q: What does the BR tax code mean?

The BR tax code is the basic-rate emergency code. It applies a 20% tax rate to all earnings with no personal allowance. The BR code is the code that HMRC issues when an employer starts a new employee without the full P45 from the previous employer. The BR code applies 20% tax to all earnings until HMRC receives the year-to-date position from the previous employer. The BR code is usually replaced by the correct cumulative code within 4 to 6 weeks. A basic-rate taxpayer on the BR code pays around £80 a month more tax than the correct code.

Q: What does the 0T tax code mean?

The 0T tax code is the no-allowance emergency code. It applies a 20% tax rate to the first £37,700 of earnings, 40% above that, with no personal allowance. The 0T code is used when HMRC has incomplete information about an employee's tax position, usually when the previous employer has not sent HMRC the final payroll figures (the P14 or EPS submission). The 0T code is more punitive than BR because it does not allow any of the personal allowance. The 0T code is replaced by the correct cumulative code once HMRC receives the missing figures, usually within 4 to 6 weeks.

The January pay packet has landed. The take-home is £100 a month higher or lower than December. You did not get a pay rise. You did not change your pension contribution. The PAYE Coding Notice is the most likely reason, and most households ignore it. Here is what the notice is, why the take-home changed, and the one thing to do in January.

Syd Lawrence

CEO & Co-founder at Delphina

Syd got fed up with being kept confused by the UK personal finance industry. So he built the tool he wished existed. Qualified to provide financial advice, prefers to provide financial clarity. No agenda. Just someone who finally got clear and wanted everyone else to be able to too.

You opened the January pay packet. The take-home is £100 a month higher than December. Or it is £100 a month lower. You did not get a pay rise. You did not change your pension contribution. You did not change jobs. Something happened to the tax code, and the PAYE Coding Notice is the most likely reason. Most households ignore the notice. The notice is the document that decides your take-home for the next 12 months. The notice is the one document that matters most in late January or February.

The PAYE Coding Notice is HMRC's annual recalculation of your tax position. The notice tells your employer which tax code to use from April onwards. The notice tells you the personal allowance for the new tax year. The notice tells you whether HMRC has added an underpayment from the previous year to the new code, or issued an overpayment refund. The notice arrives by post or via your personal tax account on gov.uk. If the January pay packet is different from the December pay packet, the PAYE Coding Notice is the most likely explanation.

What the notice tells you, in plain English

Your tax code for the new year. The letters and numbers your employer will use to work out your tax from 6 April. Most employees are on code 1257L (personal allowance £12,570). A change to a different code means the take-home will move.
Your personal allowance for the new year. The amount of income you can earn before paying tax. The personal allowance usually rises each April. The 2027/28 figure is confirmed in the Autumn Budget 2026 on Wednesday 28 October.
Underpayment or overpayment from the previous year. HMRC collects underpayments through the new year's tax code (so the underpayment is spread over 12 months) and refunds overpayments through your pay or via a cheque. The notice shows the figure.
Income sources HMRC has on file. Each employment, each pension, any taxable benefits. If a source is missing or wrong, the code will be wrong.

Why the take-home can change in January

The most common reasons the take-home changes between December and January:

New tax year personal allowance. The personal allowance usually rises each April. The rise is announced in the Autumn Budget. For 2027/28, the figure is confirmed on Wednesday 28 October 2026 (the Autumn Budget 2026). A higher personal allowance means slightly more take-home from April onwards. The change may show in the January pay packet if your employer uses an in-year tax code adjustment, or it may show from April onwards if your employer waits for the new tax year.

Underpayment from the previous year added to the new code. If you underpaid tax in 2025/26 (because of a second job, a pension change, a benefit in kind, or any other reason), HMRC will add the underpayment to your new tax year code. The underpayment is spread over 12 months, so the monthly take-home is lower for the year. The PAYE Coding Notice shows the underpayment figure.

Pension income change. If you started receiving a workplace pension, changed the pension contribution rate, or started drawing a personal pension, HMRC updates the tax code to reflect the new pension income. The new code may be higher or lower than the previous year's code. The change usually takes effect from the next pay packet after HMRC processes the change, which can be 4 to 6 weeks.

Second job change. If you started a second job, left a second job, or changed the income from a second job, HMRC recalculates the tax position across both jobs. The recalculation may shift the code on the main job. The shift can be £50 to £200 a month depending on the second job income.

Starting a new job mid-year. If you started a new job in the last 12 months, HMRC may have used an emergency tax code (BR or 0T) until your new employer's full payroll information was processed. Once processed, the code changes to the correct cumulative code. The change can be £100 to £300 a month. Most new starters see the correct code applied by the start of the next tax year, but the correction can land in January if the previous tax year has just closed.

When HMRC sends the PAYE Coding Notice

HMRC sends the PAYE Coding Notice in late January or February each year, for the new tax year that starts on 6 April. The notice is sent by post to your registered address, or made available on your personal tax account on gov.uk. The notice must reach you before 6 April so your employer can apply the new code from the start of the new tax year. If you do not receive a notice by mid-March, log into your personal tax account to check whether the notice has been issued. Many households miss the notice because they have moved address or because the post is treated as junk mail.

The emergency tax codes (BR and 0T)

Two emergency tax codes can land on a pay packet. BR is the basic-rate code. It applies a 20% tax rate to all earnings with no personal allowance. 0T is the no-allowance code. It applies a 20% tax rate to the first £37,700 of earnings, 40% above that, with no personal allowance. Both codes lead to higher than expected tax for the first few months of a new job or after a tax code error.

The BR code is the most common emergency code. It is the code that HMRC issues when an employer starts a new employee without the full P45 from the previous employer. The BR code applies 20% tax to all earnings until HMRC receives the year-to-date position from the previous employer. The BR code is usually replaced by the correct cumulative code within 4 to 6 weeks.

The 0T code is used when HMRC has incomplete information about an employee's tax position. The 0T code is less common but more punitive because it does not allow any of the personal allowance. The 0T code is usually issued when the previous employer has not sent HMRC the final payroll figures (the P14 or EPS submission). The 0T code is replaced by the correct cumulative code once HMRC receives the missing figures.

The remedy for both codes is to update the personal tax account with the correct information. The personal tax account can show the year-to-date position for each employment and the correct tax code. If the code on the personal tax account differs from the code on the payslip, the personal tax account is the source of truth. HMRC will issue a revised code to the employer within 4 to 6 weeks of the personal tax account update.

Why the emergency code costs more than the annual underpayment

The emergency code (BR or 0T) is paid every month until it is replaced. A basic-rate taxpayer on the BR code pays £80 a month more tax than the correct code. Over six months, that is £480 of additional tax paid early. The £480 is not lost. HMRC refunds it through the year-end reconciliation. But the £480 paid early is the £480 that was not in the take-home. The £480 paid early is the £480 that did not go into the ISA, the pension, or the January reserve. The emergency code is the most expensive short-term tax position a household can hold.

What to do in January

Read the PAYE Coding Notice when it arrives. Check the personal allowance against the 2027/28 figure (the Autumn Budget 2026 on Wednesday 28 October 2026 confirms the figure). Check the previous year underpayment or overpayment. Check whether any pension or benefit income has changed. If anything looks wrong, update the personal tax account on gov.uk or call HMRC. The notice is the document that decides your take-home for the next 12 months.

If you started a new job in the last 12 months and the code on the payslip is BR or 0T, the personal tax account update is the single most useful action. The update tells HMRC that the previous employer has stopped paying you, so HMRC can issue a cumulative code to the new employer. The cumulative code is the correct code. The cumulative code can be £100 to £300 a month more take-home than the emergency code.

If the underpayment on the notice looks too high, the most useful action is to check the income sources on the personal tax account. Each employment, each pension, and each benefit in kind should match the actual income for the year. If a source is missing or the income figure is wrong, the code will be wrong. The personal tax account update corrects the source. The corrected code arrives at the employer within 4 to 6 weeks.

The one specific monthly action

Before the end of January 2027, log into your personal tax account on gov.uk and read the new PAYE Coding Notice. The notice is the document that decides your take-home for the next 12 months. If the code looks right (1257L for most employees, with the personal allowance matching the Autumn Budget 2026 announcement), do nothing. If the code looks wrong (BR or 0T, a missing pension, an underpayment that does not match the actual income), update the personal tax account or call HMRC. The update corrects the code. The corrected code arrives at the employer within 4 to 6 weeks.

Sources. HM Revenue and Customs, PAYE Coding Notice process, tax year 2026/27 and 2027/28 (the 2027/28 personal allowance is confirmed in the Autumn Budget 2026 on Wednesday 28 October 2026; refresh this paragraph at ship date if the figure changes). HMRC EIM14000, emergency tax codes and the cumulative method. Gov.uk personal tax account. Figures cited at 24 November 2026 prices. The 2027/28 personal allowance figure will be confirmed in the Autumn Budget 2026 on Wednesday 28 October 2026.

For the Christmas spending reality that frames why the January pay packet can land differently, see Christmas spending UK: the three numbers that decide whether January is comfortable. For the bonus tax code mechanics that explain the December take-home, see bonus tax code 2026/27: how your December bonus is taxed. For the year-end money review that uses the three-numbers framework on net worth, pension and State Pension, see year-end money review: the three numbers to find before Bonfire Night.

Read the Notice. Check the Code. Update if Wrong.

The January pay packet tax code change is the most important tax document of the year. The PAYE Coding Notice arrives in late January or February. Read it. Check the code. Update the personal tax account if anything looks wrong. The corrected code decides your take-home for the next 12 months.

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