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What is emergency tax

what is emergency tax

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If your wages are looking a little light this month, but you’re not sure why, it’s worth taking a closer look at your pay slip. It’s possible that your employer has put you on an emergency tax code because it doesn’t know which one you should really be on, meaning that you might have paid more tax than you should have.

The emergency tax code usually accounts for the Personal Allowance – the amount you can earn before paying income tax – but it doesn’t consider any additional benefits you might be entitled to.

What to look for

The emergency tax code is reset every year, so it will depend on which financial year your payslip is from, although it always ends in the letter L.

The number part of the code is set using the Personal Allowance. For the current tax year, 2014-15, it is £10,000, so it divides that number by 10 to create a four digit number. In this case, 1000. This makes the current tax code for most people 1000L.

However, there are variations, as some payslips will display the code as 1000L W1 or 1000L M1, referring to the frequency of your wages, W for weekly and M for monthly.

It can also get a little confusing when you are not taxed, as your income is below the Personal Allowance, as these payslips will also show 1000L – although in this case you’re not actually being taxed at all.

Why am I being emergency taxed?

What is emergency taxAn emergency tax code is given when HM Revenue & Customs (HMRC) doesn’t have enough information to work out the correct tax code. This tends to happen when your employer doesn’t have your income and tax details for the full tax year.

Here are some examples of when emergency tax codes are commonly used:

  • You have started a new job, but don’t have a P45 from your previously employer
  • You’ve started your first job in the new tax year, but haven’t received any benefits or pension
  • You’ve had more than one job during the tax year
  • You were previously self-employed but have started a new job
  • You have started receiving company benefits or State Pension.

How to change tax code

If you think that you are on the wrong tax code, you will need to inform your employer or HMRC.

Unless you gave your employer a P45 from your previous employer when you started your new job, you will need to fill in a starter checklist.

This ensures that your employer can tell HMRC all about you before your first payday. If you haven’t provided the information in time, you will have to wait until the next time your wages come in.

However, as soon as HMRC has all the details it requires to calculate your tax code, your employer will receive the correct one.

Your employer will then deduct the correct tax from your wages and refund any overpaid tax to you through your wages, provided it was deducted in the same financial year.



2 Responses to “What is emergency tax”

  1. seher sadiq

    hi i start my job two months ago and i left my first job i notice that on my payslip there is a code which is 1100l w1/m1 i know this is emergency code its meaning i am paying tax because when i calculate my monthly pay they give me less for example my payslip show that my taxable pay is 493.34 and gross pay is 353 what this meaning thanks


About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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