UK / Checker
K-code tax checker (UK)
K codes are the only PAYE codes with a negative effect — instead of giving you a personal allowance, they ADD to your taxable pay. They appear when untaxed income (a benefit-in-kind, state pension, or under-paid tax) exceeds your allowance. PayslipIQ explains the K code and checks whether the maths reconciles.
Educational guidance only. PayslipIQ is not HMRC, your employer, a payroll provider, tax adviser, financial adviser, pension adviser or legal adviser. Always verify with payroll or HMRC before acting.
The problem
K codes are confusing because they reverse normal PAYE logic. The number after K, multiplied by 10, is added to your taxable pay rather than subtracted. The result is a much higher period tax than you would expect from a standard L code.
Common reasons for getting a K code: a company car or medical insurance benefit-in-kind that exceeds your allowance, the state pension being collected through PAYE on a second income source, or an HMRC under-payment from a prior year being recovered through the code.
Plain-English explanation
How a K code works:
- A K-prefix code carries a negative allowance.
- The number after K × 10 = the amount ADDED to your annual taxable pay.
- Example: K475 adds £4,750 to your taxable pay (period equivalent £395.83/month or £91.35/week).
- There is a 50% cap — period tax cannot exceed half your gross pay even on a high K code.
The K code is built from the standard personal allowance minus the items HMRC adds back: BIK, state pension, prior-year under-payment. A coding notice (P2) shows the exact build.
Common K codes: K100, K200, K475, K500, K700, K1000. The higher the number, the bigger the addition. K1000 means £10,000 added to taxable pay annually.
Worked example - K475 on £40,000 salary
- Annual base £40,000
- K475 adds £4,750 to annual taxable pay
- Effective annual taxable: £44,750
- No personal allowance deducted (it was used up by BIK)
- Tax: 20% × £37,700 + 40% × £7,050 = £10,360
- Vs 1257L on £40,000: 20% × £27,430 = £5,486
- Extra annual tax due to K475: ~£4,874
- 50% cap protects period tax from exceeding 50% of gross pay
Worked example uses 2026/27 UK figures and is illustrative. Do not use it as a personal tax calculation.
Apply this to your own payslip
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Read your P2 coding notice
The P2 shows exactly what HMRC has added back into your code. Sign in to gov.uk to view it.
Identify the cause
Common causes: company car, medical insurance, state pension being collected through PAYE, or prior-year under-payment.
Reconcile to your payslip
Period addition = K-number × 10 / 12 (monthly) or / 52 (weekly). The period taxable pay should equal gross + period addition.
Check the 50% cap
Period tax cannot exceed 50% of gross pay. If your payslip shows tax above 50%, payroll has misapplied the cap.
Run a free PayslipIQ check
Upload your redacted payslip or enter the figures manually for a per-line second opinion.
What to ask payroll
- What does my latest P6 from HMRC show as the build of my K code?
- Are you applying the 50% cap on K-code period tax?
- Has the K code been refreshed for the current tax year?
- If my benefit-in-kind ended (e.g. company car returned), have you informed HMRC?
- Will the K code drop next year if the BIK is removed?
When to contact HMRC
- Use your gov.uk personal tax account to view your P2 coding notice and see the K-code build.
- If you no longer receive the BIK or state pension behind the K code, tell HMRC so the code can be re-issued.
- For under-payment recovery, ask HMRC about a longer recovery period if the period tax is causing hardship — they can spread the recovery over several years.
FAQ
- What does a K code mean on my payslip?
- It means HMRC has determined your untaxed income (benefit-in-kind, state pension, prior-year under-payment) exceeds your personal allowance. The K-number × 10 is added to your taxable pay each year instead of subtracted.
- Why am I on a K code?
- Most commonly because a benefit-in-kind (company car, medical insurance) exceeds your personal allowance. State pension collected via PAYE and prior-year under-payment recovery are also frequent causes.
- Is there a cap on K-code tax?
- Yes. Period tax cannot exceed 50% of gross pay even on a high K code. Any over-recovery rolls forward.
- How do I get rid of a K code?
- Reduce the underlying cause: return the company car, end the medical insurance, or finish paying off the under-payment. Tell HMRC so they can re-issue your code.
- Can a K code be backdated?
- Yes. HMRC can issue a K code mid-year if circumstances change. Payroll applies it from the next available period; cumulative adjustments rebalance over the rest of the year.
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Educational guidance only. PayslipIQ provides an educational second opinion based on the figures you supply and the public 2026/27 UK PAYE, NI, pension and student-loan rules. PayslipIQ is not affiliated with HMRC and is not a regulated tax, legal, financial, payroll or employment adviser. Verify any final figure with your payroll team, HMRC, your pension provider or a qualified professional before acting.
Published 2026-05-10. Last reviewed 2026-05-10. See our methodology and payslip processing privacy notice.