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What does the UK tax code mean?

Your tax code is issued by the Inland Revenue to your employer, in order to calculate the right amount of income tax (PAYE) that can be deducted each month from your salary.

Here are some examples of tax codes:
* 489L
* 489P, 489V, 315Y, 315T
* K384
* BR, OT, DO

Except for the last few, your tax code is usually made up of numbers and a letter:
-> The letter is used to determine how the income is taxed. The most common is L: tax code with the basic Personal allowance. You will find the other letters explained on the IR website.

-> The numbers are used to determine your tax free pay (i.e. the amount you can earn before you begin to pay tax) such as: Tax free pay allowance = Number X 10 + Y.
For example, in 2005 your code was likely to be 489 (usually 489L) as the main personal allowance is £4,895.

You can calculate your net salary using the PAYE/NI Net Salary Tax Calculator.

[source: http://www.hmrc.gov.uk/leaflets/p3.htm]