As of the 6th of April 2021, the basic annual personal allowance will be £12,570 and the tax code used to indicate that a person is entitled to the standard tax-free personal allowance is 1257L. This tax code is the most common and is used for people with a sole source of income and no untaxable income, unpaid tax or taxable benefits (such as a company car).

There is also tax codes used for emergency situations such as a company hiring an employee that is not in posession of a P45. This tax code is used as a method of calculating the tax that an employee is paying within the specific payment period.

Tax code 'K' is seen less often and is applicable when the deductions due for company benefits, state penson, or tax owed from previous years outweighs the employees personal allowance. The 'K' tax number comes in the form of K followed by a number. In order to calculate their taxable income, employees with a K tax code must multiply the number following the K by ten and add this to their taxable income. For example, an employee with a tax code of K500 must add £5,000 onto their taxable income so if the employee Has a salary of £30,000 then they have a taxable income of £35,000 (£30,000 + £5,000).