Nearly everyone within the United Kingdom is authorised to a personal allowance that is tax-free. It implies that each year a specific amount of tax-free income is paid to you. However, you will not receive any personal allowance if you are on a BR tax code; instead, you will pay 20 percent tax on all your earnings. Read on to know more about what is BR tax code…!
What is BR Tax Code?
It means that all your earnings from this source will be taxed at the basic rate of 20 percent. Until your employer has all the essential information to give you the right tax code, a BR tax code is often used temporarily.
It is not always incorrect, but it should be double-checked to ensure you’re not overpaying taxes.
Do Multiple Sources of Earnings contain Different Tax Codes?
Yes, each source of earnings will contain its own tax code. So, in case you have two jobs, a private pension and a state pension, then you will have four different tax codes.
For instance, in case you had two sources of earnings. You earn £20,000 per annum from both sources.
In this case, you would have the first source of revenue with a 1257L tax code and the second with a Basic Rate(BR) tax code.
Why do I have a BR tax code?
You would have it because of the following reasons.
1. You are being given this tax code because your employer did not have the necessary details to allocate you a correct code. In simple words, you have not provided a P45 to your new employer.
2. If you are going into PAYE employment from self-employment.
3. If you have more than one source of income, for instance, a second job or pension.
What to Do with an Incorrect Tax Code?
On the off chance, you think that your tax code is not correct. In this case, we recommend you to call HMRC immediately.
They will ask for some necessary details such as your total sources of income and how much you earn from each. These details will allow HM Revenue & Customs to make sure that the tax codes are not incorrect.
If you think you have an incorrect tax code, then feel free to contact us! We will handle everything with HMRC on your behalf!
Can I get a BR Tax Code Tax Rebate?
If you think you should not have this tax code, then it’s essential to correct your code as soon as possible. Otherwise, you are probably overpaying as you are not receiving your right allowance.
All the overpaid taxes for that year will be refunded via your salary once your code is changed.
In case you had a Basic Rate tax code in the previous year or any of the last four tax years, you can be repaid for these years too.
Quick Sum Up
We hope you understand what is BR tax code and when you could have it with the highlighted details. If you have this tax code, you will not receive the tax-free personal allowance. The tax code ( (BR) is not always incorrect; you may have it due to the above-mentioned reasons. But, in case you think your tax code is not correct, then do contact HMRC directly or seek the help of a professional for this.
Turn to us if you think you have an incorrect BR tax code! We have a team of skilled accountants that will resolve all your issues by handling everything with HMRC on your behalf. Contact us right away!
Disclaimer: This article intends to provide general information based on what is BR tax code.