If your payslip shows the 1067L tax code, your employer is treating £10,670 of your pay this year as tax-free, which is £1,900 below the current standard Personal Allowance of £12,570. The “L” confirms you still qualify for a standard-type allowance; the lower number means HMRC has reduced it to collect tax on something else, usually a company benefit, an earlier underpayment, or untaxed income like the State Pension.
How to Read the Code
A UK tax code pairs a number with a letter. Multiply the number by ten to get your annual tax-free income, so 1067 means £10,670 and the current default of 1257 means £12,570.1GOV.UK. Tax Codes: What Your Tax Code Means Your employer’s payroll software spreads that allowance evenly across each pay period so the right amount of tax comes out every week or month.
The “L” suffix tells your employer you’re entitled to the standard Personal Allowance. It’s the most common letter in the system and applies regardless of age.2HM Revenue & Customs. PAYE11075 – Coding: Codes: How They Are Used and Calculated: Suffix Codes: The Suffix The L stays put even when HMRC adjusts the number, so 1257L and 1067L both carry it. The number is where the story is.
Why 1067L Is Not a Standard Code
1067L has never been the default tax code for any UK tax year. The Personal Allowance for 2015/16 was £10,600, giving a standard code of 1060L, and for 2016/17 it rose to £11,000, giving 1100L.3GOV.UK. Tax and Tax Credit Rates and Thresholds for 2015-16 £10,670 sits between those two figures and matches neither. That tells you 1067L is an adjusted code, not one HMRC hands out by default.
The standard Personal Allowance has been £12,570 since 2021/22, and the government has frozen it at that level. A Budget 2025 announcement extended the freeze to April 2031.4GOV.UK. Income Tax: Maintaining the Personal Allowance and the Basic Rate Limit So the default code for most workers and pensioners is 1257L, and will be for several more years.5GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years Seeing 1067L today means your allowance has been cut by roughly £1,900.
Why Your Allowance Has Been Reduced
HMRC lowers a tax code when you receive taxable income or benefits that aren’t taxed at source. Rather than sending you a bill, they collect the tax through your regular pay by shrinking your tax-free amount. The reductions that most often produce a code like 1067L are:
- A company car, private medical insurance, or other taxable perks. HMRC adds the cash-equivalent value of the benefit to your income for tax purposes and cuts your code so the tax on it comes out of your salary.
- Underpaid tax carried over from a previous year. Rather than demanding a lump sum, HMRC spreads collection across the current year through your code.
- State Pension or other taxable state benefits. These are paid gross, so if you also have employment or a private pension, HMRC shifts the tax onto that code.
- Savings interest above your Personal Savings Allowance. Anything untaxed gets collected through your code.
Any one of these, or a combination, can add up to the £1,900 reduction that produces 1067L against the current £12,570 allowance. A company car alone is often enough.
High Earners: Allowance Tapering
There’s one more route to a reduced L code that catches people out. If your adjusted net income exceeds £100,000, your Personal Allowance shrinks by £1 for every £2 above that threshold, disappearing entirely at £125,140.5GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years Because you’re paying 40% tax and losing allowance at the same time, the effective marginal rate in this band works out to 60%. HMRC reflects the reduction in your code, so a high earner near this threshold could see a lower number for that reason rather than because of benefits. Gift Aid donations and certain pension contributions reduce your adjusted net income and can preserve some of the allowance.
Finding the Exact Breakdown
The reason your code is 1067L rather than 1257L is written down. HMRC sends a tax code notice, sometimes called a P2 or coding notice, that lists each item raising or lowering your allowance. If you can’t find the paper copy, the fastest way to see it is HMRC’s “Check your Income Tax” online service. You sign in with Government Gateway credentials, and it shows your current code, the allowances and deductions that make it up, and your employer or pension provider details.6GOV.UK. Check Your Income Tax for the Current Year You can also use it to report changes that affect your code. One limit: if Self Assessment is your only route for paying income tax, the service isn’t available to you.
Have your National Insurance number ready. It’s on your payslip, P60, or previous tax correspondence.7GOV.UK. Your National Insurance Number Your employer’s PAYE reference, also on the P60 or payslip, links the enquiry to the right payroll record. If you’d rather phone, HMRC’s income tax helpline is 0300 200 3300, or +44 135 535 9022 from outside the UK, open Monday to Friday 8am to 6pm.8GOV.UK. Income Tax: Enquiries
One boundary worth flagging: if you live in Scotland, your code carries an “S” prefix (S1257L, for example) because Scotland sets its own income tax rates. A plain 1067L with no S means you’re taxed under England, Wales, or Northern Ireland rules.9House of Commons Library. Direct Taxes: Rates and Allowances
Fixing It If It’s Wrong
Once you see the breakdown, check that each item still matches your situation. Common problems: HMRC is still taxing a company car you handed back, an underpayment from years ago is being collected twice, or a taxable benefit has changed in value. Report the correction through the online service or the helpline. HMRC issues an updated coding notice to you and your employer, and future deductions adjust accordingly.
Corrections partway through the tax year usually work in your favour. PAYE runs on a cumulative basis, so when the new code reaches your employer, they recalculate tax from the start of the year. Any overpayment comes back through your next payslip without a separate claim.
If HMRC only spots the overpayment after the tax year ends, they send a P800 tax calculation letter setting out what you’re owed. Claiming the refund online usually gets the money to you within five working days. If you don’t claim online, HMRC sends a cheque within 14 days of the P800 date. Asking HMRC to issue a cheque instead of using the online route can take up to six weeks.10GOV.UK. Tax Overpayments and Underpayments: If Your Tax Calculation Letter (P800) Says You’re Due a Refund