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Emergency Tax Explained

Emergency Tax Explained

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The world of tax can be a confusing place at times. For the most part we usually end up trusting our employers and the tax office to get it right but now and again something crops up that we really need to be aware of. Emergency tax is one of those things.

What is emergency tax?

If your employer does not have your tax code available or the tax office doesn’t have enough information about your income then you will be issued an emergency tax code. This is a temporary solution to tax your earnings until the tax office sends your employer the correct code.

How do I know if I have an emergency tax code?

Your tax code can be found on payslips, your P45 from your last employer and the P60 form you should receive at the end of each tax year. You’ll know you have an emergency tax code if it has W1, M1 or X at the end. The code OT can also be used as a temporary tax code. Tax codes are changed every year so giving your employer a recent payslip or P45 the best way to make sure your tax code is accurate.

Why have I been given an emergency tax code?

It’s common to get an emergency tax code if you start a new job and don’t give your P45 to your new employer. You may also be emergency taxed if this is your first job, you start receiving benefits, such as a company car, from your employer or if you begin working for a company following a period of self-employment.

Emergency Tax Explained

How do I change my tax code?

Once you’ve handed your new employer the P45 from your last job your tax code should be automatically updated. The tax office will send you and your employer a coding notice containing a new tax code, which should be used from then on. Your next payslip should show the new code. If you still think you are on the wrong tax code then you should contact HMRC to have it checked and changed.

What if I’ve paid too much tax?

Employees on emergency tax codes will usually end up paying too much tax until their code is changed. If you have paid too much then your next wage should reflect the adjustment and you will be reimbursed in the following pay period. If you haven’t paid enough tax under the emergency tax code then your pay will be adjusted to take out what you owe. If you have not received a refund for emergency tax paid in a previous tax year then you can make a tax rebate claim.

While you can claim tax back from HMRC, it is best to make sure you are on the correct tax code as soon as possible to make sure you’re paying the right amount. When you call to change your tax code you should have your tax reference and your National Insurance number to hand. These can both be found on your payslip or P45.



About Maria Brett

About Maria Brett

Maria is a freelance writer with over 10 years' experience producing content for a variety of publications and websites. When not working or looking after her two gorgeous sons, she can usually be found playing flugelhorn in a brass band, helping out at her local hospital radio station, shouting at the television while watching Formula 1, at the cinema or plonked on the couch with a cold glass of wine.

Website: Maria Brett

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