The 746L tax code told your employer or pension provider to give you £7,465 of tax-free income during the 2011/12 tax year. That was £10 below the standard personal allowance of £7,475 for that year, and the small gap almost always meant one of two things: a minor taxable benefit from your employer, or a small underpayment from a previous year that HMRC was quietly recovering through your payroll.
What the Number and Letter Mean
A UK tax code is an instruction from HM Revenue and Customs to whoever pays you, telling them how much of your income to leave untaxed before applying Income Tax.{1GOV.UK. Tax Codes} The number is your tax-free amount with the last digit removed, so 746 corresponds to an allowance in the £7,460 to £7,469 band. In practice, HMRC set it at £7,465. Anything you earned above that was taxed at the basic rate of 20%.
The letter “L” meant you qualified for the standard personal allowance available to most taxpayers.{2GOV.UK. Tax Codes – What Your Tax Code Means} A code of 747L for the same year would have given you the full £7,475 with no reductions. The £10 difference between 747L and 746L works out to roughly £2 in extra tax across the whole year at the basic rate.
Under Pay As You Earn, your employer splits the annual tax-free amount into equal weekly or monthly slices so your take-home pay stays steady rather than front-loading the allowance. Pension providers handle retirement income the same way.
Why Your Allowance Was £10 Short
A £10 reduction is too small to be a rounding artefact. It came from an adjustment HMRC made to your record.
The most common cause is a benefit in kind. If your employer provided something with a small cash value, such as private medical insurance or a minor perk, HMRC valued it and subtracted that value from your personal allowance.{3GOV.UK. Payrolling: Tax Employees’ Benefits and Expenses Through Your Payroll} A benefit worth £10 pulls your allowance from £7,475 down to £7,465 and produces the 746L code. These benefits are reported on the P11D form your employer issues after each tax year.
The second common cause is underpaid tax from an earlier year. When HMRC identifies a small balance you owe, they often recover it by lowering your tax code for the following year instead of sending a bill. The debt is spread across twelve months of payroll deductions, so it barely registers on any individual payslip. HMRC can collect an underpayment this way provided it is under £3,000 and the collection would not push your total tax above 50% of your PAYE income.{4GOV.UK. Pay Your Self Assessment Tax Bill – Through Your Tax Code}
How to See Exactly Why You Had 746L
HMRC issues a coding notice, the P2, whenever your tax code changes. It sets out the calculation line by line: your personal allowance, any benefits deducted, and any underpayments being recovered. A P2 from 2011/12 would show precisely which of the two causes above produced 746L in your case.
If you no longer have the notice, the P11D from that year is the next best document. It lists every benefit in kind your employer reported, with the cash value HMRC used. Cross-checking that against £10 usually pinpoints the item. Your P60 for 2011/12 shows total pay and total tax deducted, which lets you confirm what was actually withheld.{5GOV.UK. Your P45, P60 and P11D Form}
Challenging an Old or Current Code
If you think the 746L code was wrong, or a similar small reduction is affecting you now, HMRC can review it. The quickest route today is the Check Your Income Tax service on GOV.UK, which shows your current code, estimated income, and any adjustments applied.{6GOV.UK. Check Your Income Tax for the Current Year} You can update employment details, report changes to benefits, and flag anything that looks wrong.
You can also call the Income Tax helpline on 0300 200 3300, or +44 135 535 9022 from outside the UK, to have an adviser explain the code and correct it over the phone.{7GOV.UK. Income Tax: Enquiries} Before you contact HMRC, have your National Insurance number, employer PAYE reference, recent payslips, and any P60 or P11D to hand.
Once HMRC accepts a correction, they issue a revised coding notice to you and your employer, and payroll deductions adjust from the next pay period. If a wrong code caused you to overpay tax during the year, the new code is usually set to compensate over the remaining pay periods.
For a whole tax year that ended before any correction, HMRC reconciles automatically. They compare what you earned against what was withheld and send a P800 calculation if the two do not match.{8GOV.UK. Tax Overpayments and Underpayments} With 746L the numbers involved were small: about £2 in either direction across the year. A wrong code with a much bigger gap is where reviewing an old year is worth the effort.
The Current Equivalent
The personal allowance has been £12,570 since 2021/22 and is frozen at that level through at least 2025/26.{9GOV.UK. Income Tax Rates and Personal Allowances} The standard code is 1257L, and it works exactly the way 747L did in 2011/12. If your current code is a few points below 1257, the reasoning is the same one that produced 746L: HMRC has trimmed your allowance to account for a benefit in kind or to recover a small underpayment. The P2 notice will tell you which.