Got an Emergency Tax Code? Here's how to fix it fast

Being placed on an emergency tax code is incredibly frustrating. It usually means you are being overtaxed, resulting in a noticeably smaller take-home pay than you expected. Fortunately, it is entirely fixable, and any tax you overpay will be refunded to you by HMRC.

What is an Emergency Tax Code?

An emergency tax code is a temporary code applied to your payroll by your employer when they don't have your up-to-date tax details from HMRC. This usually happens when you start a new job, return to employment after a long break, or start working for an employer after previously being self-employed.

Common emergency tax codes include:

• 1257L W1 or 1257L M1: This means your tax is being calculated on a "Week 1" or "Month 1" non-cumulative basis. You get your tax-free allowance for that specific pay period, but your previous pay and tax for the year are completely ignored.
• BR (Basic Rate): All your income from this job is taxed at the basic rate of 20%, with absolutely no tax-free personal allowance applied. This is common if HMRC thinks this is a second job.
• 0T: All your income is taxed with zero personal allowance, and higher rates apply as your income increases. This happens if your employer has no information about your tax status at all.

Why are you on an Emergency Tax Code?

The most common reasons for being put on emergency tax include:

• Starting a new job without handing in a P45 from your previous employer.
• Your employer failing to process your P45 or Starter Checklist in time for the payroll cutoff.
• Starting a second job, which triggers the BR code to ensure you don't use your tax-free allowance twice.
• Transitioning from self-employment to PAYE employment.

How to Fix an Emergency Tax Code

Fixing the issue is usually straightforward. Follow these steps:

1. Provide your P45: If you recently left a job, give parts 2 and 3 of your P45 to your new employer’s HR or payroll department immediately.
2. Fill out a Starter Checklist: If you don't have a P45 (because it's your first job, or you lost it), ask your employer for a "Starter Checklist" (formerly known as a P46). Filling this out allows them to put you on the standard 1257L code.
3. Use the HMRC App or Website: Log into your Personal Tax Account via GOV.UK or the HMRC app. You can view your current employments and update your estimated pay for the year. This often triggers HMRC to send a revised tax code to your employer automatically.
4. Call HMRC: If the digital options fail, call HMRC at 0300 200 3300. Have your National Insurance number and your new employer's PAYE reference number ready.

How to Claim Your Tax Refund

Once HMRC updates your tax code from an emergency code (like W1/M1) back to a standard cumulative code (like 1257L), the payroll software will automatically recalculate your tax for the entire year.

Any tax you overpaid while on the emergency code will typically be refunded directly in your next payslip. You will see a negative tax deduction (or a rebate) added to your net pay. If you overpaid tax at the end of the tax year (April 5th) and it wasn't fixed in time, HMRC will calculate the overpayment and send you a P800 letter, allowing you to claim the refund online.