A K code means the untaxed income and deductions in your code add up to more than your Personal Allowance. Instead of giving you tax-free pay, it adds an amount to the pay your employer taxes. Multiply the number after the K by ten to see how much is added over the tax year.
How a K code works
Most codes hand your employer an amount of tax-free pay. A K code does the opposite. HMRC's guidance for employers says to multiply the number in the code by ten to show how much should be added to taxable income before deductions are worked out. The PAYE manual describes it as an addition made to your pay each pay day instead of free pay.
The letter comes first in a K code, as in K475, because there is nothing left of your allowance to spread across the year. On a salary of £30,000, code K475 adds £4,750 to the pay that is taxed and produces income tax of £6,950.00 for the year. The standard code on the same salary produces £3,486.00, so the K code costs £3,464.00 more.
You are not being taxed on money you never received. You are paying, through this job, the tax due on something else.
What puts you on one
HMRC lists the usual causes. Tax owed from an earlier year can be collected through your wages or pension. The State Pension and taxable state benefits are paid without tax deducted, so the tax on them is collected from your other income. Company benefits such as a car, fuel or medical cover are taxed through your code. So is savings interest above your Personal Savings Allowance, and other untaxed income HMRC knows about.
Any of these on its own usually lowers the number in your code and no more. The code flips to K when they add up to more than your Personal Allowance, which is £12,570 for 2026/27.
The half-pay limit
There is a cap built into the PAYE rules. The regulations set an overriding limit: the tax deducted from a payment cannot be more than half of that payment. GOV.UK puts the K-code version plainly, saying your employer or pension provider cannot take more than half your pre-tax wages or pension.
Tax that the limit stops being deducted is not written off; it stays outstanding for HMRC to deal with. Two things follow. A large K code cannot empty a payslip. And because the limit applies to each payment on its own, a K code large enough to reach it every pay day leaves a balance outstanding after 5 April.
The limit is not a K-code privilege. HMRC's employer guide states that the regulatory limit applies to all tax codes, so it protects a payslip under 0T or D1 in the same way.
Read the coding notice, not only the code
A K code is the end of a calculation, not the start of one. HMRC sends a coding notice, the letter people call a P2, and it lists every item behind the code: the allowance you are due, the value of each benefit, the underpayment being recovered, the state benefit being taxed. That list is where a wrong K code shows itself.
Three things are worth checking. Is every item still true, or is a company car you handed back in March still in your code in October? Is the underpayment one you recognise, since it is the item people are most often surprised by? And is the same benefit in there twice, once through payrolling and once through your code, which would double the tax on it?
If something is wrong, update the details in HMRC's check your Income Tax service. Once a corrected cumulative code reaches your employer, the overpayment comes back through your pay.
When a K code ends
K codes are usually temporary. Once the underpayment has been collected, or the benefit stops, or the State Pension is taxed against a different source, the code returns to an allowance code.
Nothing happens to the number automatically on 6 April. For 2026/27, HMRC's P9X tells employers to carry the authorised tax code forward from the previous payroll record and keep using it, and says HMRC will not send a new tax code for every employee. A K code therefore runs on into the new year until HMRC replaces it.
Why does my payslip show more tax than my salary suggests?
Because your taxable pay is your salary plus the amount the K code adds. The two figures are easiest to separate by running your salary through the calculator with your own code entered, then comparing the income tax line with the one on your payslip. If they match, the code is doing what it was built to do and the question is whether the items behind it are right.
Does a K code affect my National Insurance?
No. The addition a K code makes belongs to the tax calculation only. National Insurance is charged on your actual earnings, in each job and each pay period, against the threshold prescribed for that period rather than the annual threshold of £12,570.
One qualification matters here. If your K code is there because of your State Pension, you have reached State Pension age. GOV.UK states that most people stop paying National Insurance contributions at that point, so an employee in that position pays no employee National Insurance at all. The income tax the K code collects carries on.
What do SK and CK mean?
They are K codes for Scottish and Welsh taxpayers, set from where your main home is. The addition works in the same way and the number means the same thing. Only the rate ladder the added pay runs through differs.