What your PAYE code means
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…free pay is removed to create the code (so a £12,570 personal allowance becomes the digits 1257 in the code). For example, if your code number is 1257, you are entitled to tax-free pay of £12,570. Therefore, you can earn £1,047 each month (£12,570 divided by 12 months) before any tax is deducted. Any pay above that will be taxed. Your employer works out how much tax is due, takes it from your pay, and pays the rest to you. The tax is paid over to…