What does a K-prefix mean on my tax code?

A K-prefix means you have a negative Personal Allowance — your taxable benefits or untaxed income exceed your £12,570 PA. The number after K (e.g. K150) is the amount × 10 of additional taxable income added to your salary each year by PAYE.

Can my employer take more than 50% of my pay under a K code?

No. PAYE law limits the tax taken under a K code to 50% of gross pay in any pay period (Regulation 7 of the PAYE Regulations 2003). Any excess that can't be collected is carried forward or settled at year-end via Self Assessment or P800.

How common are K codes?

Fairly common among retirees still working, employees with company cars + private medical, and people with significant unpaid tax from previous years. About 5-7% of UK PAYE taxpayers see a K code at some point. The State Pension is the single biggest trigger — about 1 million people receiving State Pension while still employed have K codes.

Why does my tax code start with K?

Last reviewed by the UK Tax Drag editorial team · 12 May 2026 · How we review · Next review due 12 May 2027 · See what changed · Report an error

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A K-prefix tax code (e.g. K150) means you have a negative Personal Allowance — taxable benefits or untaxed income exceed your £12,570 PA. The number is the amount of additional taxable income added per year (e.g. K150 = +£1,500 of taxable amount added to salary). PAYE limits K-code deductions to 50% of each pay period to prevent crippling tax bills.

How K codes are calculated

Standard codes work by subtracting allowance from taxable income. K codes do the opposite — they add to taxable income.

HMRC builds your code each year by:

Starting with the £12,570 Personal Allowance
Adding any further allowances (Marriage Allowance, blind person's)
Subtracting deductions for taxable benefits (BIK), untaxed income, or owed tax
Dividing by 10

If step 3 reduces the figure below zero, the code becomes a K code. The number after K is the absolute value × 10.

Worked example: K150

Item	Amount
Personal Allowance	+£12,570
Company car BIK	−£8,000
Private medical BIK	−£1,260
State Pension being paid	−£11,500
Tax owed from prior year	−£500
Net allowance	−£8,690
K code = abs(−8,690)/10 ≈	K869

(The actual code K150 would represent a smaller negative allowance of about £1,500.)

How a K code affects your PAYE

For each pay period, PAYE:

Takes your gross pay
Adds the K-code amount (the number × 10 ÷ 12 for monthly)
Applies the standard 20% / 40% / 45% bands to the combined total
Deducts the resulting tax

So a K150 code on a £30,000 salary means PAYE treats it as if you earned £31,500 for tax purposes — adding £1,500 ÷ 12 = £125 of extra taxable amount per month.

The 50% rulePAYE law (Regulation 7 of the Income Tax PAYE Regulations 2003) limits the tax taken under a K code to 50% of gross pay in any pay period. So even if your K code is large, PAYE can’t deduct more than half your pay. Any excess is carried forward to future pay periods or settled at year-end.

Common reasons for getting a K code

State Pension while still employed. The State Pension is paid gross. If you’re still working, HMRC collects the tax on your State Pension by reducing your employment PA. If the pension exceeds your PA, you get a K code.
Multiple large benefits in kind. Company car + private medical + interest-free loan can easily exceed £12,570 of cash equivalent for senior employees. K codes capture this.
Underpayment recovery. If you owe HMRC £500+ from a previous year, they may collect it via a K code rather than a separate bill.
Multiple pensions in payment. Pensioners with several pension pots may have one pension on a K code to capture tax on all of them collectively.
Untaxed self-employment income. Rare — usually HMRC asks you to file Self Assessment instead, but small amounts can sometimes be collected via PAYE.

What to do if you have a K code

Action 1: Get the P2 coding noticeHMRC sends a P2 letter explaining the calculation when a K code is applied. If you don’t have it, check your Personal Tax Account for the latest coding notice.

Action 2: Verify the deductions are accurateCommon errors: outdated BIK figures (the company car or medical insurance value may have changed), wrong State Pension forecast, or duplicated underpayment recovery. Phone HMRC on 0300 200 3300 if numbers look wrong.

Action 3: Consider salary sacrifice or alternative remunerationIf your K code is driven mainly by BIK, swapping the BIK for cash + private purchase (where viable) can reduce the negative allowance. E.g. taking cash instead of company car (if available) eliminates the car BIK from the code.

Action 4: If you receive State Pension and salary, consider the structureMany retired-but-working people benefit from voluntarily paying additional NI to maintain State Pension contributions, even though the PAYE K code complicates the monthly maths.

Check your overall PAYE position

The PAYE tax code traps page lists the most common K-code errors and how to spot them. The tax code decoder breaks down your specific code.

See PAYE tax code traps →

Other UK tax codes explained

Sources and methodology

K-code rules from gov.uk/tax-codes. The 50% cap from Regulation 7 of the Income Tax (Pay As You Earn) Regulations 2003. P2 coding notices via the HMRC app and Personal Tax Account.

UK Tax Drag is not authorised by the Financial Conduct Authority and does not provide regulated financial advice — see the content disclaimer for the full position. The methodology page documents how every calculator is built and reviewed.

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