How UK Postcodes Work

UK postcodes are a coding system created and used by Royal Mail across the United Kingdom for sorting mail. They are an abbreviated form of address that enables a group of delivery points to be specifically identified.

What is a UK Postcode?

The postcode is part of a coding system created and used by Royal Mail to sort mail across the UK. Postcodes are an abbreviated form of address, and they enable a group of delivery points to be specifically identified.

When originally created, the postcode was designed around the capability of Royal Mail sorting equipment to read and interpret typed or handwritten text on mail. This is why Royal Mail prefers the postcode to be separate and on the last line of an address.

The format and rules concerning postcode layout — in particular which letters can or cannot be used — stem from the fact that certain letters or combinations of letters could be confused (e.g. O and Q, or V next to V being misread as W).

Breakdown of a Postcode

A postcode is a combination of letters and numbers that defines four different levels of geographic unit. Each postcode consists of two parts — the Outward Code (e.g. PO1) and the Inward Code (e.g. 1AF) — separated by a single space.

PO1 1AF

Outward Code

The outward code enables mail to be sorted to the correct local area for delivery. It contains the area and district to which the mail is to be delivered, e.g. PO1, SW1A, or B23.

Letter rules:

The letters Q, V, and X are not used in the first alpha position.
The letters I and Z are not used in the second alpha position.
The only letters to appear in the third alpha position are A B C D E F G H J K P R* S T U V W X.

* R in the third position is only used in one postcode, namely GIR 0AA — the traditional postcode of Girobank, now part of the Santander group.

Inward Code

The second part is known as the inward code because it is used to sort the mail into the local area delivery office. It is one number followed by two letters:

The number identifies the sector in the postal district.
The letters then define one or more properties in that sector.
The letters C I K M O V are not used in the second part of the postcode.

Table: Breakdown of `PO1 1AF`

Component	Level	Description
`PO`	Postcode Area	An area code can be one or two letters (e.g. `B` or `BA`). There are 124 postcode areas on PAF.
`PO1`	Postcode District	There are approximately 2,980 postcode districts.
`PO1 1`	Postcode Sector	There are approximately 11,159 postcode sectors.
`PO1 1AF`	Unit Postcode	The last two letters define the unit postcode, which identifies one or more small user delivery points or an individual large user. There are approximately 1.8 million unit postcodes in the UK.

Valid Postcode Formats

UK postcodes follow specific patterns, where A = alpha character and N = numeric character.

Outward Code	Inward Code	Example
`AN`	`NAA`	`M1 1AA`
`ANN`	`NAA`	`M60 1NW`
`AAN`	`NAA`	`CR2 6XH`
`AANN`	`NAA`	`DN55 1PT`
`ANA`	`NAA`	`W1P 1BB`
`AANA`	`NAA`	`EC1A 1BB`

Types of Postcode

Large User Postcode

Assigned to one single address, either due to the large volume of mail received at that address, or because a PO Box or Selectapost service has been set up.

Small User Postcode

Identifies a group of delivery points. On average there are 15 delivery points per postcode. This can vary between 1 and, in some cases, 100 — but there will never be more than 100 delivery points on a postcode.

Non-Geographic Postcodes

When the UK postcode system was set up in the early 1970s, sufficient capacity was built in to cater for twenty years of development. During the 1990s, demand for postcodes in some areas began outstripping the availability of postcode combinations.

Recoding existing areas was inconvenient for both customers and database users, so dedicated non-geographic postcodes and sectors were introduced as an alternative solution.

Non-geographic postcodes are used for:

PO Boxes and Postal Voting (dedicated non-geographic sectors)
Large organisations that receive such high volumes of mail that they need to be extracted at the outward sorting stage, bagged and sent separately

Example — large organisation:

Driver & Vehicle Licensing Agency

Driving Licence Renewals

Driver & Vehicle Licensing Centre

SWANSEA

SA99 1AA

Example — PO Box:

PO Box 276

BOGNOR REGIS

PO21 9AA

In some areas, a non-geographic PO Box postcode sector may cover more than one Post Town.

Why UK Postcodes Are So Precise

UK postcodes are designed to:

Work with automated sorting machines
Reduce delivery errors
Pinpoint delivery locations quickly

In many cases, a postcode can identify:

A single building or large user
A small group of houses (typically around 15 delivery points)

Summary

UK postcodes are structured into outward and inward parts
Each postcode defines four geographic levels: area, district, sector, unit
Strict letter rules avoid characters that could be misread by sorting machines
There are around 124 areas, 2,980 districts, 11,159 sectors, and 1.8 million unit postcodes
Some postcodes are non-geographic — used for PO Boxes and high-volume organisations

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Source: Royal Mail Programmers' Guide — PAF^® address structure.