Ever looked at your payslip and thought, What is BR tax code? Why am I on it? BR code is short for “Basic Rate” and applies when your income is taxed at 20% without the benefit of a personal allowance.
This happens when you are either starting a new job or have multiple sources of income. This can also result when HMRC does not yet have the correct details about your earnings.
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What Is a Tax Code?
A Tax Code helps explain how much PAYE tax should be deducted from your salary or pension during a time period. HMRC determines your tax based on your income, and then shares it with you.
If you start a new job or receive extra income, then HMRC will adjust your tax code. This will show an updated tax-free allowance and taxable income.
What Is BR Tax Code?
BR “Basic Rate” tax code, instructs an employer to tax all income from that source at the basic rate of 20% in the UK. With the BR code, you do not receive any tax-free Personal Allowance for that specific income.
Why Do I Have a BR Tax Code?
Many common reasons can arise for why you are being given a BR tax code. It is related to having more than one source of income. The following are some reasons why you received a BR tax code:
- Having a second job or a private pension can be a reason for the application of the BR tax code.
- If you have switched jobs, then your new employer may use a BR code as an emergency measure if you are not providing them with a P45 from your previous job. This ensures tax is deducted until HMRC sends the correct code.
- If you are unable to provide HMRC with the up-to-date details on your employment or income, then they may issue a BR code as a default.
- Since your State Pension is taxable but not taxed at source, HMRC can reduce your tax-free amount on another income source to collect tax. Thus, leading to a BR or K code.
What To Do With An Incorrect Tax Code?
It is your responsibility to ensure your tax code is correct. If you think it is wrong, take the following steps:
- Find your correct tax code on your payslip, your annual P60 form, or any PAYE Coding Notice (P2) from HMRC.
- You can check your income tax online on the gov.uk website. You must sign in to your Personal Tax Account to:
- Update details about employment.
- Report other income that affects your tax code.
- Update or add information about company benefits.
- If you cannot use the online service or have another complex issue, then contact HMRC directly. Be prepared to provide details about your income and employment.
- Once you report your correction, HMRC will notify you and your employer of the new tax code. Your new tax payslip will reflect the change and correct any previous overpayment.
- If you have overpaid tax in a previous year due to an incorrect BR tax code, HMRC will send you a tax calculation (P800) detailing any refund you are due.
Where Can You Find Your Tax Code?
Finding your tax code is easy, this can be done by checking the following sources:
- Your tax code is printed on your pay slips. If you have multiple jobs, each pay slip may have a different code.
- Your P45 form or your annual P60 will show your tax code.
- Using the HMRC online services, you can view your current and previous tax codes. This can be done by signing in to your Personal Tax Account on the gov.uk website or using the HMRC mobile app.
- HMRC will send you the Notice of Coding (P2) to confirm any changes to your tax code.
How BR Code Impacts Your Tax Bill?
A BR code significantly impacts your tax bill and reduces your take-home pay, especially if applied incorrectly.
No Personal Allowance
With a BR code, you do not receive the standard tax-free Personal Allowance on that specific income. The allowance is £12,570 for the 2025/26 tax year for most people is given to only one source of income.
Reducing Take-Home Pay
Tax starts deducting from the very first pound you earn, your monthly or weekly take-home pay for that job or pension will be lower than if you had an L code.
Risk Of Overpayment
If the BR code is only applied to your only or main source of income, then you will overpay tax since you are not benefiting from your Personal Allowance.
Correct For a Second Job
If you are having two jobs, then it is normal and correct for your second job to have a BR code. Your Personal Allowance will be applied to your main job, while your second job is taxed from the first pound.
Impact Of BR Code On Your Pay
The BR code will have a significant impact on your take-home pay from the income it is applied to. This can happen, especially when compared to an income source with a Personal Allowance. This can result in:
- You have to pay 20% tax on all the earnings from that job.
- The take-home pay will be reduced compared to someone with a tax-free allowance applied.
- If the BR is applied inaccurately, then you may be paying too much tax, especially if this is your only job.
What Are The Conditions For Refunding a BR Tax Code?
You are eligible to get a refund if your BR code was incorrect. This can cause you to overpay tax, but a refund is possible under the following conditions:
- You have started a new job and were temporarily put on an emergency tax code, leading to overtaxed pay.
- Your BR code was applied to a secondary income, but your main job did not use the full Personal Allowance.
- If your total earnings from all your jobs were below your Personal Allowance, but a BR code taxed one of your incomes.
- An overpayment can result, especially if you stopped working mid-year and the BR code was not adjusted.
How To Get The Refund?
You can get the refund from HMRC of the BR tax by following some of these steps:
Contact HMRC
Contact HMRC and inform them that you believe your tax code is incorrect and that you have overpaid. You will be required to provide your personal details, National Insurance number, and employer PAYE scheme reference.
HMRC Review
HMRC will review your records, and if an overpayment is confirmed, then they will issue a new tax code and process a refund.
Automatic Repayment
Normally, HMRC automatically processes a refund through their end-of-year tax reconciliation (P800). Any return will then be added to your wages.
Directly Claiming
You can use A P50 form to claim a refund directly from HMRC if you have left employment mid-year.
Bottom Line
By concluding this topic, we hope you understand what is BR tax code is, and when you can have it. Understanding it is crucial for making sure that you are not overpaying tax unnecessarily.
By checking your payslip, staying HMRC compliant, and resolving any code issues quickly, you can ensure your income is taxed fairly and you are not left out of pocket.
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