Tax codes are HMRC's way of checking how much tax and National Insurance you're supposed to pay each year. If you've got any special circumstances that change the tax you owe, they'll be shown in your tax code. For most people in the 2019/2020 tax year, for example, the basic tax code would be 1250L.

Breaking that code down, the taxman can tell that there are no special circumstances that apply (the “L” part), and that the taxpayer gets a standard tax-free Personal Allowance of £12,500 (the “1250” part, which you multiply by 10). That allowance means that they won't be taxed until they're making more than this.