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Tax codes & PAYE

Emergency tax codes

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Emergency tax codes

Find out what you need to do if you're on an emergency 'BR' tax code - and how to recoup overpaid tax.

You've started working for a new company and are excited to get your first paycheck. But a huge chunk of your pay has been taken in tax, far more than you were expecting. What should you do?

When HMRC doesn't know all of your financial details, it can apply an emergency tax code and you may miss out on tax-free allowances you would normally get.

But this can be easily fixed - our guide explains how to do it. 

  • Get a head start on your 2016-17 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?.    

Emergency tax code - what to do

If your employer does not know what your tax code should be, you will be taxed on an 'emergency' code of 1150L (1100L in 2016-17) or given a BR code.

What is a BR emergency tax code?

A BR code means that you receive no tax-free personal allowance, so everything you earn will be taxed at 20% (or the basic rate, hence BR). 

Although you can claim back overpaid tax from HMRC, it is better to get your code changed as soon as possible, so you are given the correct allowance and pay the right amount. 

To do this, you should give your employer your P45.

If you don't have a P45 from previous employment, your employer will ask you to fill in a starter checklist.

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How much is emergency tax?

If you've been given a emergency tax code, you will miss out on the tax-free personal allowance of £11,500.

This means you'll be taxed on all of your income, and will reduce you pay by more than is necessary. But how much extra will you pay?

  • Basic-rate taxpayers (earning up to £45,000) will pay an extra £1,300 in the 2017-18 tax year
  • Higher-rate taxpayers (earning up to £100,000) will pay an extra £4,600 in the 2017-18 tax year

Anyone earning more than £100,000 begins to steadily lose the personal allowance by £1 for every £2 they earn above that figure. At £123,000, the personal allowance is lost altogether.

What is an emergency 1150L tax code?

If you are put on the emergency code 1150L, you will be given a tax-free allowance of £11,500, above which you will start paying tax. 

For most employees, this will be correct, as it is the basic personal allowance and assumes that you are entitled to 1/12 of the allowance each month, (or 1/52 each week if you are paid weekly). 

However, it does not take into account any backlog of allowance that may be due to you – for example, following a period of unemployment. For this reason your employer may have to adjust the 1150L coding in some cases. 

As with a BR code, you need to contact your employer straight away and give them your P45. If you don't have a P45 your employer will ask you to fill in a starter checklist.

Emergency tax codes and your P45 

If you leave your job during the tax year your employer will issue you a P45. 

It shows how much taxable pay you received from your employer in that year and how much tax you have paid. 

You might not always have one to give to a new employer - for example, if the new role is your first one, or you have not been working or claiming benefits recently. In this case, you'll have to fill in a new starter checklist.

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