Most adults in the UK get a tax-free Personal Allowance. This means they can receive income up to a certain amount per year without paying Income Tax on it. The government determines what this amount will be each tax year. For the 2022/23 tax year, it is £12,570. Income after this amount will be charged at a different rate, depending on how much you earn.
However, not everyone’s Personal Allowance will be the same. It changes depending on whether you are entitled to any other allowances, you owe tax, you are owed tax from a previous year, or you earn more than £100,000 per year.
The way your income is taxed also depends on which tax code you are on. Currently, the most common tax code in the UK is 1257L, which means the standard tax-free allowance of £12,570 has been allocated to your income. In some cases, though, a source of income won’t be eligible for the standard rate. If this applies to you, you will be given a different tax code to let your employer or pension provider know how much tax you need to pay.
You could also be put on an emergency tax code while HMRC tries to figure out how much tax you should be paying. In this article, we’ll explain everything you need to know about emergency tax, including why you may have been put on it and what you can do to make sure you are on the right tax code.
If you are paying emergency tax on your income, it means you are being taxed at a temporary rate until HMRC has enough information about your income to work out what your correct rate should be.
You will know you are being emergency taxed if you see the tax codes M1, W1, X, BR or 0T on your payslip. You may also notice that you are paying more tax than you actually owe because all your income above your Personal Allowance is taxed, regardless of any other tax-free allowances you may be entitled to.
Continue reading to find out what to do if you are put on emergency tax.
How much is emergency tax?
The amount of emergency tax you pay depends on your circumstances.
Depending on how much you earn, you could pay the basic rate of 20 per cent or the higher rate of 40 per cent on all of your income, for example. Or, you might only be taxed on your pay that exceeds the Personal Allowance.
Why does it matter if I’ve been put on emergency tax?
Often, emergency tax is much higher than the tax you should actually be paying, which means you receive less pay than you were expecting. (There is, however, a rule in place which states you cannot lose more than half your PAYE earnings in a month.)
Emergency tax codes don’t take into account any tax you’ve already paid, nor all the circumstances that affect the tax you owe. This means you may miss out on tax reliefs or allowances that you qualify for in addition to your Personal Allowance.
If, for example, you are entitled to the Blind Person’s Allowance, it will normally be reflected in your tax code. It won’t, however, show up on an emergency tax code, which means you could be losing £2,600 from your tax-free allowance for the 2022/23 tax year.
What are the emergency tax codes?
The emergency tax codes are M1, W1, X, BR and 0T. Check out our article on tax codes to find their meanings.
Why have I been put on emergency tax?
If HMRC doesn’t have enough information to assign you the correct tax code, it may put you on an emergency one instead. This is to ensure that you still pay tax while it is acquiring the information it needs to apply the correct code.
If you’ve started a new job and you haven’t provided your new employer with a P45 or P46 form, it is likely that you will be put on an emergency tax code. These forms show how much you’ve earned and how much tax you’ve paid for the current tax year, so your new employer can work out your correct tax code.
Some other reasons for being put on an emergency tax code include:
- Starting a new PAYE job after being self-employed
- Benefits from your job either stopping or starting
- Receiving taxable state benefits
- Claiming marriage allowance or expenses you get tax relief on
- Using up your tax-free Personal Allowance on another source of income
- Earnings increasing enough to put you in a higher tax bracket
What do I do if I’ve been put on emergency tax?
If you’ve started a new job and you realise you are being emergency taxed, the easiest way to correct your tax code is to give your new employer your P45 or P46 form.
If you don’t have this form, you can give your employer the information they need and they will pass this on to HMRC. HMRC should then be able to change your tax code for you and will normally repay you any overpaid tax on your next pay date. Alternatively, you can contact HMRC yourself to rectify your tax code and claim back any tax you are owed.
If you are still paying emergency tax after three months, you can use HMRC’s online Income Tax checker or phone 0300 200 3300 to find out what’s going on.
How else can I stop emergency tax without a P45?
You may not have a P45 because this is your first job, for example, or you’ve started a new job while still employed at your previous one. In this case, you may be able to prevent being emergency taxed by filling in a starter checklist for your new employer. Doing so should ensure you are on the right tax code from your first pay date.
How long do I stay on emergency tax?
If you are on an emergency tax code and you are paying too much tax, don’t worry. Emergency tax codes are temporary, and once HMRC has all the necessary information about your income, it will update your tax code to the correct one.
If, however, your change in circumstances means you haven’t paid enough Income Tax for the year, you will stay on the emergency tax code until you’ve paid the right amount.
What happens if I overpaid tax?
If you pay too much tax, you will get a tax rebate from HMRC after they have corrected your tax code.
Can I claim back emergency tax from previous years?
If you have been paying too much tax in a particular tax year, you will normally be repaid through your salary in that tax year once your code has been corrected.
If, however, you have been on an emergency tax code in previous years and have not received a refund, you should tell HMRC so they can look into it for you.
Any tax rebate you are owed will be automatically paid to you via BACS or cheque, and you will also be sent a P800 tax calculation explaining your emergency tax deductions. It is wise to check this against your own figures to make sure your repayment is correct. When doing so, it is worth noting that if you receive more than one P800, balances for previous years will be included in the following year’s calculations.
Summary
The most common tax code for the 2022/23 tax year is 1257L. This means you can receive income up to the Personal Allowance of £12,570 without paying tax on it. If HMRC doesn’t have enough information to assign you the correct tax code, it may put you on an emergency one while it works out what your correct rate should be. The emergency tax codes are M1, W1, X, BR and 0T.
If you’ve started a new job and you realise you are being emergency taxed, the easiest way to correct your tax code is to give your new employer your P45 or P46 form. If you don’t have this form, you can give your employer the information they need, and they will pass this on to HMRC. HMRC should then be able to update your tax code to the correct one and will normally repay you any overpaid tax on your next pay date. Alternatively, you can contact HMRC yourself to rectify your tax code and claim back any tax you are owed. You may also be able to stop emergency tax without a P45 or P46 form by filling in a starter checklist and giving it to your new employer. This should ensure you are on the right tax code from your first pay date.
If you are still paying emergency tax after three months, you can use HMRC’s online Income Tax checker or phone 0300 200 3300 to find out what’s going on.