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HMRC changed my tax code because of savings interest — and got it wrong
7 min read
If your payslip shows the letters BR in the tax code box, your employer is deducting 20% income tax on every single pound you earn — with no personal allowance deducted first. For most employees on a normal salary, this means significant overtaxation. A £3,000/month gross earner on BR pays £600 in tax instead of roughly £288. That's £312 per month disappearing unnecessarily.
Here's what BR means, when it's actually correct, and how to fix it if it isn't.
What does the BR tax code mean?
BR stands for "Basic Rate." Unlike normal tax codes (such as 1257L), which allocate your personal allowance (£12,570 tax-free per year) against your earnings, BR applies the 20% basic rate to all income from this source, starting at £1.
HMRC uses BR in two situations:
- Second job or second income source — Your personal allowance is already being used by your main income, so this additional income is taxable from the first pound at 20%. This is correct.
- Emergency code — HMRC doesn't have enough information about you to calculate the right code. This is usually wrong, and needs fixing.
How to tell if your BR code is right or wrong
BR is probably correct if:
- This is a second job or a side income (e.g., a weekend role, seasonal work, or a second employer)
- Your personal allowance is already fully allocated to another income source
- You're receiving a pension from a former employer while still working elsewhere
BR is probably wrong if:
- This is your only job
- You've just started a new job and didn't provide your P45 in time
- You've never been in contact with HMRC under this employer
- You were previously on a normal code at this employer and it suddenly changed
The monthly cost of an incorrect BR code
| Monthly gross | Tax with 1257L | Tax with BR | Monthly overpayment | Annual overpayment |
|---|---|---|---|---|
| £1,500 | £0 | £300 | £300 | £3,600 |
| £2,000 | £121 | £400 | £279 | £3,348 |
| £2,500 | £205 | £500 | £295 | £3,540 |
| £3,000 | £288 | £600 | £312 | £3,744 |
| £4,000 | £455 | £800 | £345 | £4,140 |
Based on 2026/27 tax year. 1257L figures assume cumulative PAYE across the full year.
How to fix an incorrect BR code
Step 1 — Provide your P45
If you've just started a new job and still have your P45 from your previous employer, give it to your new HR or payroll team today. This is the fastest route to the correct code — your employer submits the P45 details to HMRC's systems and a new code is usually issued within days.
Step 2 — Complete the New Starter Checklist
If you don't have a P45, ask your employer for the HMRC New Starter Checklist. Tick Statement A (this is your only job) if it is — your employer will then apply the standard 1257L code on a Week 1 basis until HMRC confirms the cumulative code.
Step 3 — Contact HMRC directly
Call HMRC on 0300 200 3300 or update via your Personal Tax Account online. Tell them:
- This is your only/main employment
- Your employer's PAYE reference (shown on your payslip)
- Your estimated annual income
HMRC will issue a corrected code electronically. Your employer must apply it from the next payroll run.
Step 4 — Recover overpaid tax
Once the correct cumulative code is applied, PAYE recalculates your year-to-date position and recoups any overpayment through reduced tax in subsequent pay periods. You don't need to file a separate claim for this. If you reach year end still owed money, HMRC will issue a P800.
BR vs. other emergency codes
| Code | What it does | When used |
|---|---|---|
| BR | 20% on all income, no personal allowance | Second job or emergency |
| D0 | 40% on all income, no personal allowance | Second income presumed at higher rate |
| D1 | 45% on all income | Additional rate — rare emergency code |
| 0T | No allowance, all income taxed at band rates | No P45, no starter declaration |
| 1257L W1/M1 | Personal allowance applied but not cumulatively | Common starter emergency code |
Frequently asked questions
Can BR apply to my pension as well as my job?
Yes. If you're receiving a workplace or private pension while also employed elsewhere, the pension income may be coded BR to prevent your personal allowance being allocated twice. This is correct — the allowance applies to your main income source first.
I've been on BR for 6 months — can I still get my money back?
Yes. PAYE is cumulative for the tax year. Once the correct code is applied, your employer's payroll software will recalculate your year-to-date tax and refund the difference across your remaining pay periods. If there's still a balance at 5 April, HMRC will issue a P800.
My employer says they can't change the code — is that true?
Employers must apply whatever code HMRC instructs. They cannot override an HMRC-issued code. If HMRC issues a corrected code and your employer doesn't apply it, report this to HMRC. If your employer applied BR themselves without HMRC instruction, they are acting incorrectly.
Will fixing my BR code affect next year too?
Yes — HMRC will carry the corrected code forward to the next tax year automatically, unless something changes (new job, change in income, etc.).
Use our tax code checker to confirm what code you should be on, or our overpaying tax calculator to see the exact monthly impact of your current code.