K Tax Codes Explained (2026/27) — Negative Personal Allowance & Company Benefits

A K tax code (such as K450) indicates that you have untaxed income, P11D company benefits (company car, private medical insurance), or prior-year underpaid tax that exceeds your £12,570 Personal Allowance. HMRC multiplies the number after 'K' by 10 and adds that amount to your taxable pay—subject to a strict 50% maximum deduction cap per pay period.

Example K Tax Code	Annual Notional Income Added	Extra Monthly Basic-Rate (20%) Tax
K100	+£1,000 / yr (+£83.33/mo taxable)	+£16.67 / month (+£200/yr vs 0T)
K450	+£4,500 / yr (+£375.00/mo taxable)	+£75.00 / month (+£900/yr vs 0T)
K800	+£8,000 / yr (+£666.67/mo taxable)	+£133.33 / month (+£1,600/yr vs 0T)
Statutory PAYE Protection Cap	50% Maximum Deduction Rule	Tax deducted cannot exceed 50% of gross pay

Frequently Asked Questions (2026/27 & 2027/28 UK Rules)

Why has my tax code changed to a K code?

HMRC issues a K code when deductions to your Personal Allowance—such as a taxable company car, private medical insurance, State Pension payments, or tax owed from an earlier year—are larger than your £12,570 tax-free allowance.

What is the 50% limit on a K tax code?

Under HMRC PAYE regulations, an employer cannot deduct more than 50% of your pre-tax wages in Income Tax in any single pay period when operating a K code.

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