What does the 1231L tax code mean?
1231L means: Tax-free allowance of about £12,310.00 a year. In short: the standard allowance reduced by £260, most often a small benefit in kind or an underpayment being collected through the code. A UK tax code is the instruction HMRC sends your employer for the 2026/27 tax year (6 April 2026 to 5 April 2027): it sets how much of your pay is tax-free before income tax is deducted through PAYE, so the code on your payslip directly decides your take-home. The standard code for most employees with one job is 1257L, worth £12,570 of tax-free income a year, any other code should have a reason behind it (a company benefit, a second job, an HMRC adjustment), and a code that's wrong for your situation means paying the wrong tax every single payday until it's fixed. Decoded below against HMRC's rules as checked on 2026-08-28, with what 1231L costs or saves against the standard code.
Decoded
- L: you get the standard personal allowance.
- Your allowance is £260.00 below standard, usually company benefits or tax owed being collected through your pay.
Why HMRC has given you 1231L instead of 1257L
The number is the arithmetic: £12,310 of tax-free pay rather than the standard £12,570, so something worth £260 has been set against your allowance for the year. That is a small enough figure to narrow the candidates. It is the right size for a modest benefit in kind, the sort of thing a professional subscription, a small amount of untaxed interest or a company perk produces, and it is the right size for a previous year's underpayment being collected a month at a time rather than demanded at once.
What it costs is small and worth knowing precisely: £260 of allowance at the basic rate is £52.00 a year, £4.33 a month, and at the higher rate £104.00 a year. That is the whole difference between this code and the standard one, so if your payslip is further out than that, the code is not what is wrong.
Your HMRC personal tax account lists the deduction by name and amount, which is the only place the actual reason appears: the code itself cannot tell you which of the candidates above applies to you. If the benefit has ended or the underpayment is settled, ask for the code to be corrected rather than waiting, because PAYE will otherwise keep collecting to the end of the tax year.
How do I find out what code I should be on?
Your current code is on every payslip and on your P60, and the reasoning behind it is in your HMRC personal tax account, which lists the allowances and deductions that produced the number. If the account shows an estimate that is out of date, a company benefit you no longer have or a job you have left, you can change it there and a new code reaches your employer within a few weeks. Employers cannot change a code themselves: they apply whatever HMRC issues, so the fix always runs through HMRC rather than payroll.
Check your own code
Type any code, this page's and every other format HMRC issues:
Tax-free allowance of about £12,570.00 a year.
- L: you get the standard personal allowance.
Other codes people look up
2026/27 rules, checked 28 August 2026 by Hadi. If your code looks wrong, correct it via your personal tax account on gov.uk, refunds for the current year arrive through your pay automatically.