What is an Emergency Tax Code?
An Emergency Tax Code is used to deduct income tax from individuals when HMRC doesn’t have all the necessary financial information. They are designed to be temporary until the correct tax code is established.
In certain cases, this means that no tax free allowance is available, and all income received will be taxed at basic rate (BR) which is at 20%. Sometimes an emergency tax code is correct, but in many cases it can mean that you will pay too much tax. You will be paying more than you expected in tax because you are missing out on this Personal Allowance entitlement.
On this page you will find information about:
What does an Emergency Tax Code look like?
There are several different Emergency Tax Codes.
The most usual Emergency Tax Code is the BR tax code which means that you are paying tax on all your income at the basic rate with no accounting for your Personal Allowance.
If you earn over the basic rate tax band, then you will probably get an OT emergency tax code. This also does not take into account any Personal Allowance you are entitled to and deducts tax at either the basic, higher or additional income tax rate.
1185 as part of your emergency tax code, shows that the Personal Allowance amount is being applied (currently £11,850). M1 at the end of the code means that this rate is only being applied for this period of earnings, in this case ‘M’ is for monthly. If you are paid weekly, the code is W1. If you have a job with non-standard pay arrangements, this is in you tax code as an ‘x’.
Why do I have an Emergency Tax Code?
There are many reasons that why you may be given an Emergency Tax Code.
The most common reasons for having an emergency Tax Code are:
- Your employer does not have the correct information about how much tax from your earnings should be paid to HMRC, so they are instructed to deduct tax at the higher rate
- You have more than one job
- You have been receiving state benefits
- You stop or start getting work related benefits
- You start receiving a pension
- You claim marriage allowance or expenses you can claim tax relief for
- You have previously been self-employed
Important to know …
If you have started a new job and your employer has not received your P45 from your previous job they will not be able to give you the correct tax code, because they do not know how much tax you have already paid in that tax year. It is therefore important to make sure that you keep your P45 from your last job to give to your new employer.
Can I get a tax refund if I have paid Emergency Tax?
If you have been on an Emergency Tax Code and paid too much tax, in almost every case you will be entitled to a Tax Refund.
In some cases this will be made automatically by HMRC at the end of the tax year, or they will instruct your employer to reduce the tax deducted from your earnings through a new tax code. However, if they do not receive the correct information from you and/or your employers, they may not be able to do this
Can I get a tax refund if I have paid Emergency Tax?
If you have been on an Emergency Tax Code and paid too much tax, in almost every case you will be entitled to a Tax Refund.
In some cases you will be automatically refunded by HMRC at the end of the tax year, or they will instruct your employer to reduce the tax deducted from your earnings through a new tax code. However, if they do not receive the correct information from you and/or your employers, they may not be able to do this.
For further Tax information, please follow the links below:
Income Tax includes:
What is income tax?
How is Income Tax calculated?
How much income tax do I need to pay?
Income Tax Allowances
Income Tax Rates and Taxable Bands
How do I pay income tax?Tax Codes includes:
Where do I find my Tax Code?
New Tax Codes
What does my tax code mean?
Different Tax Codes
More than one job
Emergency Tax CodesConstruction Industry Scheme includes:
CIS For Subcontractors
CIS For Contractors (Employers)VAT (Value Added Tax) includes:
What is VAT?
When do I pay VAT?
How much VAT do I need to pay?
Do I need to register for VAT?
How do I pay VAT?
Can I claim VAT back?Self Assessment includes:
What is Self Assessment?
Do I need to complete a Self Assessment tax return?
How do I get a Self Assessment tax return form?
How do I register for Self Assessment?
Can I register for Self Assessment on behalf of a company or trust?
What is a Unique Tax Reference number (UTR)?
How do I get a Unique Tax Reference (UTR) number?
How do I complete my Self Assessment tax return online?
Can I complete my Self Assessment tax return on paper?
Record keeping
Self Assessment Tax return deadlines
What if I submit my tax return late?
What if I submit my tax return incorrectly?
How is my tax calculated?
Do I need to check my tax calculation?National Insurance includes:
What is National Insurance?
What are the different types of National Insurance?
Who pays National Insurance?
What is National Insurance used for?
Do your National Insurance payments affect your Pension and Benefits?
How much National Insurance should I pay?Pension Tax includes:
Do I have to pay tax on my pension?
Do I have to pay tax on my state pension?Corporation Tax includes:
Who needs to pay Corporation Tax?
How much Corporation Tax do I need to pay?
How do I pay Corporation Tax?Inheritance Tax includes:
What is Inheritance Tax?Capital Gains Tax includes:
What is Capital Gains Tax?
