If your payslip shows the letter N as part of your tax code, for example 1131N or N1257, it means you have elected to transfer part of your Personal Allowance to your spouse or civil partner via the Marriage Allowance scheme. The N code is used by the lower earner who gives away part of their allowance.
How the N code works
Under Marriage Allowance, the lower earner can transfer 10% of the standard Personal Allowance (£12,570 × 10% = £1,257, rounded to £1,260) to their partner. This reduces the lower earner's tax-free amount from £12,570 to £11,310, a reduction of £1,260.
In the tax code, this appears as:
- Lower earner (transferring): code reflects PA of £11,310, shown as 1131N
- Higher earner (receiving): Personal Allowance of £13,830, shown as 1383M
Who gets tax code N?
Tax code N is given to:
- The lower-earning partner in a marriage or civil partnership
- Someone who has applied for Marriage Allowance through HMRC (online, by phone, or by post)
- Both partners must be basic-rate taxpayers, neither can be a higher or additional rate payer
- The lower earner must earn below the Personal Allowance or be a non-taxpayer
Financial impact of the N code
The N code costs the lower earner up to £252 per year in extra income tax (£1,260 × 20%). But their partner with the M code saves the same £252 per year. The net household saving is therefore zero, the benefit is that the household's combined tax burden is reduced by £252 per year versus the alternative of the higher earner not receiving the transfer.
| Lower earner income | Tax without N code | Tax with N code | Extra tax paid |
|---|---|---|---|
| £8,000 (below PA) | £0 | £0 | £0 (N/A) |
| £12,000 | £0 | £0 | £0 (still below PA) |
| £15,000 | £486 | £738 | £252 |
| £20,000 | £1,486 | £1,738 | £252 |
| £25,000 | £2,486 | £2,738 | £252 |
The scheme makes sense when the lower earner does not use their full Personal Allowance, they are effectively giving away unused tax-free capacity that the higher earner can benefit from.
How to cancel the N code
If you no longer want to transfer your allowance, cancel via:
- Your HMRC Personal Tax Account at gov.uk
- Phone: 0300 200 3300
- The change will take effect at the start of the next tax year
Frequently asked questions
What does tax code N mean?
The N suffix means you have transferred 10% of your Personal Allowance (£1,260) to your spouse or civil partner via Marriage Allowance. Your allowance is reduced from £12,570 to £11,310, so your code will typically be 1131N.
Is tax code N bad?
Not necessarily. You pay up to £252 more tax per year, but your partner saves the same amount. As a household you are £252 better off overall compared to not claiming Marriage Allowance at all.
What is the difference between N and M tax codes?
N = the giver (lower earner, reduced allowance). M = the receiver (higher earner, increased allowance). Both are part of the same Marriage Allowance transfer, you cannot have one without the other.
Can I have N and M at the same time?
No. One partner has N (reduced allowance), the other has M (increased allowance). You cannot both give and receive the transfer simultaneously.