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HMRC changed my tax code because of savings interest — and got it wrong
7 min read
It is June 2026. The new tax year started on 6 April, and there is a reasonable chance your payslip has been wrong ever since.
Every April, HMRC processes millions of tax code changes. People change jobs. People return from maternity or paternity leave. People get their first payslip. And every year, a large proportion of those people end up on an emergency tax code — a temporary code that overtaxes you until the situation is sorted out.
If your take-home pay has been lower than expected since April and you haven't investigated, this post is for you. We'll show you exactly what to look for on your payslip, how much you're likely overpaying, and the exact steps to fix it — usually within one pay cycle.
Check your code right now
Look at your most recent payslip. Find the "Tax Code" box — it's usually near the top. Does it say 1257L W1, 1257L M1, BR, or 0T? If so, you're almost certainly on an emergency code.
Check what my tax code should be →What is an emergency tax code?
An emergency tax code is a temporary code HMRC assigns when it doesn't have enough information about your income to calculate the right tax. The system is designed to be conservative — rather than risk under-collecting, HMRC defaults to codes that typically overtax you, then corrects it later.
In practice, "later" only happens if you take action. Many people sit on an emergency code for the entire tax year without realising — and only discover the problem when their end-of-year P60 shows more tax paid than expected.
The most common emergency codes in 2026/27 are:
| Code | What it means | Effect on your pay |
|---|---|---|
| 1257L W1 or 1257L M1 | "Week 1 / Month 1 basis" — your personal allowance is applied but tax is calculated as if every pay period is the first of the year. Cumulative adjustments don't happen. | Often looks correct in April but causes overpayment later in the year, especially if you had a higher-earning month early on. |
| BR | "Basic Rate" — 20% tax on every pound, no personal allowance applied at all. | Severe overtaxation from day one. A £3,000/month earner pays £600 tax instead of ~£288. |
| 0T | No personal allowance, all income taxed at band rates (20% / 40% / 45%). | The harshest emergency code. Even worse than BR for higher earners. |
| D0 | All income taxed at 40%, no allowance. | Used when HMRC thinks this is a second income at higher rate. Almost always wrong for a main job. |
Why has this happened to you?
The most common triggers — especially at the April 2026 tax year start:
- You started a new job and didn't provide a P45 from your previous employer in time
- You returned from a career break, redundancy, or parental leave and HMRC had no current PAYE record for you
- It's your first ever job — HMRC has no prior year data to work from
- You changed jobs in March or April — P45 processing delays are common at tax year changeover
- Your employer updated their payroll system and the migration didn't carry your code correctly
- You received a pension and an employment income simultaneously and HMRC wasn't sure how to split the allowance
Exactly how much are you overpaying?
This is the table most people want. Here is the monthly overtaxation by salary and code type — and the total if it has been running since April:
| Monthly gross salary | Correct tax (1257L) | On BR code | Overpaying per month | Overpaid since April (2 months) |
|---|---|---|---|---|
| £1,800 | £88 | £360 | £272 | £544 |
| £2,200 | £155 | £440 | £285 | £570 |
| £2,800 | £255 | £560 | £305 | £610 |
| £3,500 | £372 | £700 | £328 | £656 |
| £4,500 | £538 | £900 | £362 | £724 |
| £5,500 | £705 | £1,100 | £395 | £790 |
BR code figures. W1/M1 overpayments are smaller early in the year but compound over time. 0T overpayments are larger. All figures based on 2026/27 rates.
The good news: every penny shown in that final column is reclaimable. HMRC doesn't get to keep it.
How to fix it: four steps
Step 1 — Locate your P45
Your previous employer must give you a P45 when you leave. If you haven't given it to your new employer's payroll team, do that today. Your employer submits the P45 details to HMRC electronically, and a corrected code is usually issued within a few days — in time for your next payroll run.
Can't find your P45? Ask your previous employer for a duplicate. Some payroll systems can re-issue them easily. If they refuse or no longer exist, move to Step 2.
Step 2 — Complete the New Starter Checklist
If there's no P45 available, ask your current employer's HR or payroll team for the HMRC New Starter Checklist (the form that replaced the old P46). The critical question is Statement A, B or C:
- Statement A — This is your first job since 6 April, or since leaving full-time education, and you have not been receiving state benefits. → Your employer applies 1257L M1 as a temporary code, which is much better than BR.
- Statement B — This is now your only job but you've had a previous job since 6 April. → Same as A.
- Statement C — You have another job or pension. → BR is correctly applied to this income.
Most people who end up on BR by mistake should have ticked A or B. If you ticked C in error, the fix is simply to resubmit the checklist with the correct statement.
Step 3 — Call HMRC or update online
If your code is still wrong after your first corrected payday, go direct to HMRC. You have two options:
Online (fastest): Log into your HMRC Personal Tax Account. Go to "Pay As You Earn" → "Check your tax code." If HMRC's records are incorrect, you can update your income details and they will issue a new code to your employer, usually within 1–2 working days.
By phone: Call HMRC on 0300 200 3300 (Monday–Friday, 8am–6pm). Tell them:
- Your National Insurance number
- Your current employer's PAYE reference (printed on your payslip)
- That you believe you are on an emergency code and this is your only/main job
- Your estimated annual income
HMRC issues the corrected code electronically. Your employer must apply it from the next payroll run — they cannot refuse.
Step 4 — Reclaim your overpaid tax automatically
Here is the part most people don't realise: you do not need to file a separate claim to get your money back.
Once the correct cumulative code is applied (e.g., 1257L without the W1/M1 suffix), PAYE calculates your tax on a cumulative basis from 6 April. It looks at your total earnings and total tax paid since the start of the year, compares it to what you should have paid, and automatically credits the difference through reduced tax deductions in your next few pay periods.
Example: You've been on BR since April, earning £3,000/month. You've overpaid by approximately £610 over two months. Once your code is corrected in June, your employer's payroll software will see you've overpaid and reduce your July and August tax deductions accordingly — your money comes back through your payslip, not as a separate bank transfer.
If you've overpaid a larger amount and the year-end arrives before it's fully recovered, HMRC will send you a P800 Tax Calculation letter and either offer an online repayment (within 5 working days) or post a cheque.
How to confirm the fix has worked
When you receive your next payslip after the code change:
- Check the tax code box — it should now show 1257L (or a legitimate variation like 1100L if you have a benefit in kind, etc.) without the W1 or M1 suffix
- Check your income tax deduction — it should be noticeably lower than previous months as the cumulative recovery kicks in
- If the code still shows an emergency code, your employer may not have processed the HMRC update — chase their payroll team directly
Not sure if your tax code is right?
Enter your tax code into our free checker. It will tell you exactly what it means, whether it looks correct for your situation, and how much tax it implies you should be paying.
Check my tax code for free →What if you left the job before fixing it?
If you were on an emergency code at a job you've since left, you can still claim the overpaid tax. You have up to 4 years from the end of the tax year to make a claim.
- For overpayments in 2025/26: claim by 5 April 2030
- For overpayments in 2026/27 (the current year): claim by 5 April 2031
Claim online via your Personal Tax Account, or if the year has ended, wait for HMRC's P800 letter. You can also submit a claim proactively using form R38.
Frequently asked questions
My payslip says 1257L — does that mean I'm not on an emergency code?
Not necessarily. If it says 1257L W1 or 1257L M1, the W1/M1 suffix means it's still being applied on a non-cumulative emergency basis. The number alone looks normal, but the suffix is the problem. You want plain 1257L with nothing after it.
Can an emergency code affect my National Insurance too?
No. Emergency tax codes only affect income tax. National Insurance is calculated separately based on your earnings in each pay period — it's not affected by your tax code.
My employer says they're waiting for HMRC to issue the code — is that right?
Yes, in some cases. If you've contacted HMRC and they're processing it, your employer can't apply the new code until HMRC sends it. However, if it's been more than a week and nothing has moved, call HMRC back to chase the update and ask for a reference number for your case.
I'm on a zero-hours contract — does this still apply?
Yes. Tax codes apply regardless of contract type. If you're on zero hours and you're on a BR or 0T code but this is your only/main income source, you're still being overtaxed and the fix is the same.
Could being on the wrong code affect my pension?
Not directly — pension contributions are typically calculated on your gross or pensionable pay, not your after-tax pay. But it's worth checking your pension deduction on your payslip hasn't changed unexpectedly at the same time.
I've just realised I've been on BR since April — can I really get all of it back?
Yes. Every penny of overpaid income tax is yours. Fix the code now and the PAYE system will handle the refund automatically through your remaining payslips this tax year. Nothing is lost permanently — HMRC holds it and will return it either via payslip adjustment or a P800 at year end.
Ready to check? Use our tax code checker to see what your code should be in 2026/27 — it takes about 60 seconds and tells you exactly whether you're on the right code or whether you have money to claim back.