A 1057L tax code means HMRC has set your tax-free personal allowance at £10,570 for the year — £2,000 below the standard £12,570 that most employees and pensioners receive.1GOV.UK. Tax Codes – What Your Tax Code Means The default code for someone with a single job or pension and no adjustments is 1257L, so 1057L tells you HMRC has made a specific reduction to your allowance. The reason will be on your P2 Notice of Coding, and it’s worth confirming it’s correct.
What the Number and Letter Mean
Your tax code tells your employer or pension provider how much of your income to treat as tax-free under Pay As You Earn. The number is your tax-free allowance with the final digit removed: multiply it by ten to get the pound figure. So 1057 stands for £10,570, and 1257 stands for £12,570.2Tolley Tax Glossary. Tax Code The letter L means you’re entitled to the standard personal allowance.3GOV.UK. Understanding Your Employees Tax Codes – What the Letters Mean Everything about 1057L is standard except the size of the allowance itself, which has been reduced from the baseline.
Why HMRC Reduced Your Allowance to £10,570
The gap between £12,570 and £10,570 is £2,000. HMRC arrives at 1057L by starting with your full personal allowance and subtracting items that either count as extra taxable income or represent tax you owe. The result is a smaller allowance, and the smaller allowance produces a smaller code number.
Company Benefits (Benefits-in-Kind)
The most common reason is taxable benefits from your employer. Private medical insurance, a company car, and similar perks count as part of your income, but the tax isn’t taken directly from your salary. Instead, HMRC deducts the value of those benefits from your personal allowance so that the tax gets collected through your regular payroll.1GOV.UK. Tax Codes – What Your Tax Code Means
The Tolley Tax Glossary uses exactly this scenario as its worked example: an employee with the standard £12,570 allowance who receives £2,000 in benefits-in-kind ends up with net allowances of £10,570 and a tax code of 1057L.2Tolley Tax Glossary. Tax Code If you have a modest company benefit — a typical private medical policy, for instance — 1057L is a very plausible outcome.
Underpaid Tax From an Earlier Year
HMRC also reduces your code when you owe tax from a previous year and it’s being clawed back through your current payroll. Untaxed savings interest above your Personal Savings Allowance, or state pension payments that haven’t been taxed elsewhere, can be handled the same way. Each of those adjustments is itemised on your P2 Notice of Coding, which HMRC issues when your code changes and which shows the full allowance, every deduction, and the resulting code.4GOV.UK. PAYE Manual – How They Are Used and Calculated – P2 Notice of Coding
The High-Income Allowance Taper
If your adjusted net income goes above £100,000, your personal allowance drops by £1 for every £2 of income over that threshold, and disappears entirely at £125,140.5GOV.UK. Income Tax Rates and Personal Allowances Someone earning £104,000 loses £2,000 of allowance and lands on 1057L. Between £100,000 and £125,140 this creates an effective marginal rate of 60%, because you’re losing allowance and paying 40% tax on the same income. A bonus or pay rise that pushes you over £100,000 for the first time is a frequent trigger.
Marriage Allowance Transferred to Your Spouse
Marriage Allowance lets a lower-earning spouse or civil partner transfer £1,260 of their unused personal allowance to the higher earner.6GOV.UK. Marriage Allowance – How It Works The person giving up the allowance sees their own code fall. Combined with a small benefit-in-kind, that transfer could land the giver on a code around 1057L.
Check Your P2 and Your Personal Tax Account
The P2 Notice of Coding is the single document that explains your 1057L code in HMRC’s own numbers. If you can’t find the paper notice, log into the “Check your Income Tax” service on GOV.UK through your personal tax account. It shows your current code, your estimated income for the year, and the deductions HMRC has applied, and it lets you report changes such as a company benefit ending or a change in income.7GOV.UK. Check Your Income Tax for the Current Year8GOV.UK. Personal Tax Account – Sign In or Set Up
If the online service doesn’t clear it up, call the HMRC Income Tax helpline on 0300 200 3300 with your National Insurance number and your employer’s PAYE reference to hand.9GOV.UK. Income Tax – Enquiries When HMRC updates your code, your employer receives an electronic coding notice and applies it in the next payroll run. If the earlier code caused you to overpay, the refund usually comes back through your pay. Check the next couple of payslips to confirm the new code has landed.
If the Code Is Wrong
A wrong code means you’re paying too much or too little tax as the year goes on. After 5 April, HMRC reconciles its records and issues a P800 tax calculation (or a Simple Assessment) where there’s a discrepancy.10GOV.UK. Tax Overpayments and Underpayments Overpayments come back as a refund. Underpayments are often collected by adjusting the following year’s code, though larger amounts may need to be paid directly, and interest accrues on unpaid tax at 7.75% as of January 2026 (the Bank of England base rate plus 4%).11GOV.UK. HMRC Interest Rates for Late and Early Payments Catching the problem mid-year is cheaper than waiting for the year-end letter.
The Frozen Personal Allowance
The £12,570 standard allowance applies for the 2025/26 and 2026/27 tax years.5GOV.UK. Income Tax Rates and Personal Allowances It has been frozen at that level since 2021/22 and is legislated to stay there until at least April 2031.12House of Commons Library. Fiscal Drag – An Explainer For anyone on 1057L, the practical effect is that the starting figure your code is calculated from won’t rise to offset your deductions. If your benefits stay the same, your code stays the same. Any changes to allowances and bands are announced by the Chancellor in the budget or autumn statement and take effect the following April.13GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years