Postcodes used in the United Kingdom, British Overseas Territories and Crown dependencies are known as postcodes (originally, postal codes). They were implemented nationally between 11 October 1959 and 1974, having been devised by the General Post Office (Royal Mail). A full postcode is known as a "postcode unit" and designates an area with several addresses or a single major delivery point.

The structure of a postcode is two alphanumeric codes that show, first, the Post Town and, second, a small group of addresses in that post town. The first alphanumeric code (the Outward code or Outcode) has between two and four characters and the second (the Inward Code or Incode) always has three characters. The Outcode indicates the postcode area and postcode district. It typically consists of one or two letters, followed by one digit, two digits, or one digit and one letter. This is followed by a space and then the Incode which indicates the postcode sector and delivery point (usually a group of around 15 addresses). The incode always has 3 characters, starting with a number (denoting a sector within the district), and ending with two letters (denoting delivery points which are allocated to streets, sides of a street or individual properties). Postcode areas are usually, but not always, named after a major town or city — such as M for Manchester.

Each postcode area contains a number of post towns which are not themselves alphabetically denoted; however each will usually constitute one or more postcode districts. For instance, a sizeable part of southern England is covered by the GU postcode area, named after the town of Guildford. Guildford itself consists of postal districts GU1 and GU2, whereas nearby Woking, a major commuter town—6 miles (10 km) away—is a post town within the postal district GU22. Typically, the central part of the city the postcode area is named after will have the number 1 e.g. B1 (Birmingham), LS1 (Leeds), M1 (Manchester). However, other post towns within the area are then usually numbered based on their location or alphabetically — especially in London — e.g. Chingford on the north-eastern edge of London being E4, whereas adjacent Walthamstow to the south being E17.

As a general rule, large post towns are numbered from the centre outward such that outlying parts have higher numbered districts. Nevertheless, the disparate post towns within a postal area can be numbered according to various criteria and this is not necessarily based on their geographical situation. The town the postal area is named after is typically, however not always, 1. In particular, the centrality of a postcode district within a postcode area cannot be inferred from the postcode alone. For example, SE1 covers a large part of Central London south of the Thames whereas SE2 covers Abbey Wood at the far end of the Elizabeth Line.

Postcodes have been adopted for a variety of purposes in addition to aiding the sorting of mail: for calculating insurance premiums, designating destinations in route planning software and as the lowest level of aggregation in census enumeration. The boundaries of each postcode unit and the address data of approximately 29 million delivery points are stored, maintained and periodically updated in the Postcode Address File database. The initial system of named postal districts, established in London and other major cities in 1857, eventually evolved into its present form. In 1917 London was divided into broad, numbered partitions, and this model was adopted by other cities in 1934. In theory, deliveries can reach their destinations using only the house number (or name). However, Royal Mail guidelines suggest providing a full address. The London post town accounts for 40% of Greater London, and it initially consisted of ten postal districts: EC (East Central), WC (West Central), N, NE, E, SE, S, SW, W, and NW. This later changed and the SE and NE were abolished.

In 1917, to increase efficiency, each postal district was divided into sub-districts, each identified by a number. The area served by the district head office was allocated the number 1, while the other numbers were assigned alphabetically to the delivery office, e.g. N2 East Finchley delivery office, N3 Finchley delivery office, N4 Finsbury Park delivery office etc. Since then these sub-districts have remained largely unchanged.

The same model was adopted by other large towns and cities and applied to them. In 1864/65 Liverpool was divided into four districts- eastern, northern, southern and western, and Manchester and Salford into eight numbered districts in 1867/68. In January 1932 the Postmaster General approved the designation of some predominantly urban areas into numbered districts. On November 1934 the Post Office announced the introduction of postal codes in "every provincial town in the United Kingdom large enough to justify it". Pamphlets were distributed to each householder and business in 10 regions, which provided details of the number of the district in which their premises lay. The public was "strongly encouraged" to include this district number as part of their address.

A publicity campaign the following year promoted the use of the district numbers. Posters were put up on every pillar box in these affected areas displaying the number of the district and a plea for co-operation. Every post office in these numbered districts was also to display this information. Printers of cards and stationery were asked to include the district numbers in addresses, and electoral candidates for the upcoming general election were asked to correctly address the 100 million items of mail they were expected to post. Businesses received a book containing maps and a list of the correct district numbers for every street in the ten areas.

Further experiments with electromechanical sorting machines in the latter half of the 1950s saw the Post Office advocate for the introduction of postcodes in order to improve efficiency. In January 1959 the Post Office surveyed public attitudes towards the use of postal codes, before choosing Norwich to experiment with codes. This resulted in a six-character alphanumeric code with three letters, denoting a geographical area, and three numbers to identify individual addresses. On 28 July Ernest Marples, the Postmaster General, announced that Norwich had been selected, and all 150,000 private and business addresses would receive a code by October. In October 1965, Tony Benn as Postmaster General announced that postal coding would be extended to the rest of the country in the coming years. On 1 May 1967, postcodes were first introduced in Croydon, with many of the codes for Central Croydon starting with "CRO", and the surrounding post towns with CR2, CR3 and CR4. The following year, postcodes were introduced to Aberdeen, Southampton, Brighton and Derby. This uniform system set out a set of three characters after a space, such as 0AA. This was the beginning of a ten-year plan to be completed by 1972, with a cost of £24 million.

By 1970, codes had been introduced for the London Western and North Western postal districts, and by December it was postmarked with the message "Remember to use the Postal Code". At the end of that same year, those living at addresses had started to receive notifications of their postcodes.

In Norwich, which had already been allocated eight automatic mail sorting machines, original postcodes followed the format NOR, followed by a space and a two-digit number, which could include a leading zero and a single letter, instead of the two-letter format that is used today. In April 1965, Greater London was created, and its postal districts stayed the same.

By 1971, codes had been further introduced in Aberdeen, Southampton, Brighton, Derby, Bristol, Bromley, Cardiff, Coventry, Manchester, Newcastle upon Tyne, Newport, Reading, Sheffield, and the Western district of London. However, small quirks remained in certain post towns, with central Newport (Gwent) allocated NPT, which lasted until 1984. In Glasgow, the originally G-prefixed codes were renumbered, such as C1 becoming G1, W1 becoming G11, N1 becoming G21, E1 becoming G31, S1 becoming G41 and SW1 becoming G51.

Moreover, in Toxteth, many of the postcodes began with L8, and in both Manchester and Salford, M postcodes were allocated for Salford 7 becoming M7, and so on. In some places, such as in Brighton and Hove, districts numbers were replaced with unrelated numbers, and many of the old codes still live on in a few street signs.

By 1972, the full national postcode system was almost complete and the coding exercise to Norwich was finalised in 1974. Sir John Eden, the Minister of State for Posts and Telecommunications, had anticipated the completion of the system in 1972, during a House of Commons meeting. From that month, the remaining 60% of Greater London's area has postcodes referring to 13 other post towns. Additionally, there weren't enough postcodes to adequately cover districts in central London (particularly in the WC and EC areas), so they were divided with a letter suffix rather than being split into new numbered districts so as to retain the familiar codes.

Prior to 1 April 2010, the Royal Mail granted licence to use the postcode database for a fee of approximately £4,000 per year. After a campaign and a government consultation in 2009, the Ordnance Survey released Code-Point Open, outlining every current postcode in Great Britain along with a geo-code for second use, free of charge and under an attribution-only licence (Open Government Licence as part of OS OpenData).

The Office for National Statistics (ONS Geography) manages and publishes a selection of free and downloadable postcode products that link all current and suspended UK postcodes to a variety of administrative, health, statistical and other geographies using the Code-Point Open grid reference.

The postcodes are alphanumeric and vary in length from six to eight characters (including a space). They are divided into two parts, separated by a single space: the outward code and the inward code respectively. The outward code encompasses the postcode area and postcode district while the inward code includes the postcode sector and postcode unit respectively. A few examples of postcodes are "SW1W 0NY", "PO16 7GZ", "GU16 7HF", and "L1 8JQ".

The outward code is located before the single space in the middle and consists of two to four characters. Some examples of outward codes are "L1", "W1A", "RH1", "RH10" or "SE1P".

The postcode area is a segment of the outward code, and is between one and two characters long and always alphabetical. Examples of postcode areas include "L" for Liverpool, "RH" for Redhill and "EH" for Edinburgh. It's worth noting that certain postal areas may cover a wide area; for instance, "RH" encompasses several settlements in eastern Surrey and northern Sussex, and "BT" (Belfast) covers all of Northern Ireland.

The postcode district comprises one digit, two digits or a digit followed by a letter.

The inward code is located after the single space in the middle and has three characters. This assists with the delivery of post within a postal district. A couple of examples of inward codes are "0NY", "7GZ", "7HF", or "8JQ".

The postcode sector includes the first character of the inward code, made up of a single digit.

The postcode unit is a two-characters addition to the postcode sector, which might indicate a street, part of a street, a single address, a group of properties, a single property, a sub-section of the property, an individual organisation or (for example, the Driver and Vehicle Licensing Agency) a subsection of the organisation. The level of discrimination based on how much post is received by a premises or business is often well established. In the UK, postcode districts are generally grouped into post towns, with larger post towns sometimes using more than one code. Cases where a single postcode may cover two separate post towns are not unheard of. There are, however, more specific locations where special postcodes such as those for Crown dependencies, British Overseas Territories and British Sovereign Base Areas, non-geographic codes and BFPO codes for British military use apply.

The sorting of post is either done manually via labelled frames or increasingly with machine help. Optical character recognition (OCR) is used to aid automated mail sorting, and is best applied to mail that follows a standardised format. In the process, a "faced" string containing the postcode is entered into a machine which sets the address into specific bags for the delivery office the mail is destined for. The same machine is also able to use the outward postcode to make further sorters, ensuring that each postal walk receives only relevant letters.

Postcodes that are missing or incomplete can be sorted using the post town name, with the mail bags of bundles sent by rail, air or road to the delivery office. Here the mail is inward sorted into the same walk order that allows the deliverer to make most progress through their round. The roll-out of walk sequencing machines is now streamlining the process. Integrated Mail Processors (IMPs) scan the postcode of the item and translate it into two phosphorus barcodes which are then printed and read in order to sort the mail by its outward postcode. Alternatively, a Compact Sequence Sorter (CSS) might check the outward postcode, allowing it to be organised in the same order as a walking postman/woman would deliver letters, door to door. In this instance, the top phosphorus barcode is the inward part of the code, with the bottom as the outward. IMPs can also read RM4SCC items exist, which is used for Cleanmail and operated in a different format to the above.

Moreover, a five-digit system known as Mailsort was established for those who send a minimum of 4,000 letter-sized items. It incorporates the outward part of the postcode which is useful for mail routing, meaning a specific range of Mailsort codes is sent on a particular plane or lorry. Consequently, Mailsort users are granted with a database which can convert from postcodes to Mailsort codes, and will also receive a discount if they sort their mail at the post office using this code. Those that provide outgoing mail split up into its postcode receive no such reward, since postcode areas and districts are automatically assigned mnemonics which don't facilitate the grouping of items into operationally small blocks. Walksort was discontinued in May 2012.

The Address Management Unit of Royal Mail maintains an official database of UK postal addresses and postcodes in its Postcode Address File (PAF), which is made available under licence for a fee regulated by Ofcom. The PAF is commercially licensable and is often incorporated into address management software packages. These packages allow most addresses to be constructed solely from the postcode and house number. By including the map references of postcodes in the address database, the postcode can be used to pinpoint a postcode area on a map.

A complete list of all current Great Britain postcodes, known as Code-Point Open, has been made available online (since 1 April 2010) by Ordnance Survey. Under the government's OS OpenData initiative, it is available for re-use without charge under an attribution-only licence. The Code-Point Open list includes median coordinates for each postcode but excludes postcodes in Northern Ireland and the Crown dependencies.

While postcodes were introduced to accelerate the delivery of mail, they are also useful tools for other purposes, especially since codes are very detailed and identify only a few addresses. Some of the uses for postcodes include:

• Navigating to an address using satellite navigation systems, through the combination of street number and postcode
• For life insurance companies and pension funds to evaluate life expectancy for pricing and reserving
• For other types of insurance companies to set premiums for motor/business/home policies
• To determine catchment areas for school places or doctors' surgeries
• Working out the closest location of an organisation to a given address

In certain areas, postcodes have also become indicators of social status. Some residents have looked to change their postcode in an attempt to associate themselves with an area of higher desirability, disassociate with a poorer area, reduce insurance premiums, or be connected with an area with a more economical cost of living. In all these cases, Royal Mail has declared "virtually no possibility" of altering the postcode, referring to their policy of changing postcodes only to reflect changes in their operations.

Postcode areas rarely align with local government boundaries, and a few straddle England's borders with Wales and Scotland. This has led to British Sky Broadcasting subscribers receiving the wrong BBC and ITV regions, as well as newly authorised radio amateurs being assigned incorrect call signs.