What Is a K Tax Code?
A K code (e.g. K475) means you have income or benefits that aren't being taxed elsewhere, and it's large enough to cancel out your Personal Allowance entirely and leave extra taxable income on top. Instead of reducing your taxable pay, a K code increases it.
The number in a K code (475 in the example) represents the amount added to your taxable income, multiplied by 10 — so K475 adds roughly £4,750 to your taxable pay for the year.
Why Would I Have a K Code?
- Company benefits exceeding your Personal Allowance: a company car, private medical insurance, or other benefit in kind large enough that it uses up the full £12,570 allowance and then some.
- Unpaid tax from a previous year: HMRC collecting a prior underpayment through your current tax code rather than a one-off bill.
- State Pension plus employment: if you receive the State Pension (paid gross, without tax deducted) alongside a job, HMRC sometimes uses a K code on your employment income to collect the tax due on your pension.
Is There a Limit on How Much Extra Can Be Deducted?
Yes — by law, a K code can never take more than 50% of your gross pay in a single pay period, regardless of how large the code's number is. This "regulatory limit" protects you from an unexpectedly enormous deduction in any one payslip; if the full amount can't be collected, the shortfall carries forward.
What Should I Do If I Have a K Code?
- Check the coding notice HMRC sent explaining the calculation — it should break down exactly which benefit or previous underpayment is driving it.
- Confirm the benefit-in-kind values are accurate (your employer reports these via a P11D) — errors here are a common cause of an incorrect K code.
- If something looks wrong, contact HMRC via your Personal Tax Account to query it.
Related Calculators
Check Your Own Numbers
Rules like these are easier to apply once you can see your actual take-home pay, tax and NI broken down.
Open the Take-Home Pay Calculator →