An emergency tax code is a temporary tax code issued by HM Revenue and Customs (HMRC). HMRC issued this code when it does not have enough information to determine your correct tax position.
Usually, the emergency code is used when you start a new job or begin receiving a pension. In some cases, receiving this code means less take-home pay than expected. These codes are used as a temporary measure by HMRC to ensure tax is collected when your full financial history isn’t yet available.
This guide explores the emergency tax code meaning and how to get off the emergency code. It also discusses how to claim overpaid tax, caused by the emergency code.
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What is a Tax Code?
In the UK, pension providers and employers use a tax code to determine how Income Tax is deducted through Pay As You Earn (PAYE). The tax code tells how much of your income is tax-free before Income Tax is deducted.
The most common tax code is 1257L, which means you receive the standard Personal Allowance of £12,570 for the tax year.
However, when HMRC doesn’t have enough information to determine your tax position, it uses an emergency tax code.
For further guidance on tax codes and their meaning, visit the HMRC official website.
What Does Emergency Tax Code Mean?
HMRC uses an emergency tax code when it lacks sufficient information about your income or tax history to calculate the correct tax position. Receiving an emergency code is not something to worry about, but you need to understand why you have received one and how to fix it.
You may receive an emergency tax code if sufficient information has not been provided to HMRC. When HMRC lacks accurate and up-to-date information, you get stuck with this code, and you may end up paying more tax than you owe.
Example of the HMRC Emergency Tax Code
The most common HMRC emergency tax code indicators are W1, M1 and X. If your tax code ends with these codes, you are being taxed on a non-cumulative (emergency) basis. For example:
The typical tax code for an employee is 1257L, but when it ends with “1257L W1”, it functions as an emergency code. W1 applies to weekly pay periods.
Moreover, if the code ends with M1 monthly pay), such as “1257L M1”, it means tax is calculated on a month-by-month basis.
Note: Emergency codes are seen on your payslip. Your payslip may also include “NONCUM” depending on the payroll software your employer uses. “NONCUM” indicates a non-cumulative tax calculation.
Common Emergency Tax Codes
The table below shows some of the common HMRC tax codes that act like emergency codes:
| Tax Code | Meaning |
| W1/M1/X | Receiving these codes means you get the basic Personal Allowance but on a non-cumulative basis. |
| 0T | The 0T tax code means no Personal Allowance is applied to that income. Based on your income, you are taxed at the basic or higher rates. |
| BR | Your income is taxed at the basic rate of 20% with no tax-free allowance. |
| D0 | Income is taxed at the higher rate |
| D1 | Income is taxed at the additional rate |
For a comprehensive list of tax codes, visit the government’s official website.
Is 0T an Emergency Tax Code?
The tax code 0T is not an emergency code, but it acts like one. It is used in situations similar to emergency codes, such as starting a new job without a P45.
The BR tax code, sometimes considered as an emergency tax code BR, is typically used for secondary employment, where all income is taxed at the basic rate (20%) with no Personal Allowance applied. This code is applied temporarily by HMRC or the employer, but when it is used, you may lose your tax-free Personal Allowance.
Why Am I on an Emergency Tax Code
HMRC uses emergency codes in the following situations:
New Job without P45
You may be placed on an emergency tax code if you start a new job and your new employer does not have your P45. Without P45, HMRC doesn’t know your tax position.
State Pension
If you begin receiving a taxable benefit or State Pension, HMRC may temporarily apply a non-cumulative tax code until records are updated.
Special Cases in HMRC Coding Manual
HMRC uses emergency codes when it lacks sufficient information for a proper code.
Missing Employer Information
You might get taxed on an emergency basis if your payroll hasn’t reported your details to HMRC on time.
Key Features of Emergency Tax Codes
Some of the main features of emerging coding that you need to understand are:
Non-Cumulative Calculation
Your tax doesn’t account for earlier earnings in the tax year, but it is calculated on that pay period.
May Lead to Overpayment
You may end up paying more tax initially because your allowances are not properly spread across the year.
Temporary by Design
Emergency codes are not permanent; they are meant to be temporary. Once HMRC receives enough information to calculate a correct annual code, they will replace the code.
What Happens If You Have Overpaid Your Tax?
When you are on an emergency code, you may overpay taxes. However, there is nothing to be worried about because this code is temporary. Once HMRC receives updated and completed information, they will check your total annual income.
Moreover, once the correct code is applied, the extra tax that you have paid is normally refunded automatically through your wages. In some cases, you can claim a refund directly.
Note: Although an emergency tax can reduce your take-home pay, overpaid tax can be reversed once the records are updated.
Can I Claim an Emergency Tax Code Refund?
Yes, you can claim a refund only if you have overpaid tax on an emergency tax code. When you get an emergency code, HMRC calculates your tax on a non-cumulative basis. This may lead to overpaid tax.
Once your tax code is updated with complete and correct information, overpaid taxes are usually refunded automatically, and you don’t have to claim the funds manually.
However, if the tax year has ended or you have left your job, you may need to claim the refund manually through your Personal Tax Account. You can also contact HMRC directly to claim the refund.
Important: Not everyone on an emergency tax code overpays, but if you have, you get the refund.
How To Get Off an Emergency Tax Code?
An emergency code is automatically removed for most employees once HMRC receives your employment history. If you want to speed up the process, then you must:
- Provide your P45 from your previous employer to your new employer
- If you don’t have a P45, fill out the HMRC starter Checklist.
HMRC updates the tax codes once it receives updated employment information, although processing times may vary.
How to Change the Emergency Tax Code?
You can change or update your details manually through the online service. Sign in to your Personal Tax Account and update your income details. Report changes such as annual income, state pension or company benefits. HMRC will review these changes and will send a new tax code.
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Bottom Line
An emergency tax code can be frustrating, especially when it reduces the take-home pay. Nevertheless, you must understand that these are temporary and non-cumulative code.
You can minimise the time spent on these temporary codes by providing a P45 and updating your Personal Tax Account. Review your payslips regularly to ensure your tax code is correct and that any refund is processed.
If you are still confused over tax codes and processes, consult our professionals. At CAIL, our experts can help you navigate complex tax matters and resolve emergency tax code issues.