What is emergency tax?

An emergency tax rate occurs when your employer doesn’t know what tax code you should be on. This normally happens when you leave a job and join a new one without a p45 to give to your new employer. It can also happen when you are working for an employer after being self-employed, getting company benefits, or a state pension.

Why does emergency tax matter?

Being on an emergency tax rate can tax you up to 50% of your wages. Sounds scary. But the good thing is that this is only temporary and can be corrected. The first step to finding out if you are on emergency tax is knowing what tax code to look out for.

How does emergency tax work?

Normally when the tax you owe is calculated under Pay As You Earn (PAYE) the following information is considered:

• Tax paid in the tax year to date
• Which tax brackets your earnings fall into
• Personal allowances

Under emergency tax this information isn’t available to your employer so the tax that you pay is based on the assumption either that you were previously earning the same as you are in your new job or that you’ve used up all of your tax allowances.

What are the emergency tax codes?

There are a few different emergency tax codes you could be on. These are indicated by the following references on your payslip.

• W1
• M1
• X
• BR
• OT

If you have these tax codes, then you are on emergency tax and you may have overpaid. Luckily, getting back on the correct tax code and removing the emergency tax rate is relatively easy to do.

How do I correct my tax code?

To correct your emergency tax code that you’ve been given, all you have to do is provide your employer with your p45. If you do not have your p45 then your employer will give you a document called a ‘starter checklist’ to fill out. Once you have provided one of these then your tax code will automatically update with your correct tax. If you are still on an emergency tax code after this you can correct it by putting a claim in through our rebate calculator.

I’ve corrected my emergency tax rate, now what?

Once you have followed the steps above about correcting amending your emergency tax rate, you may be entitled to a tax refund.

When does emergency tax get paid back?

Once your new employer has processed your p45 and you are not on the emergency tax rate then the amount you were wrongly taxed on before should be paid automatically. If this does not happen, enter a claim though our rebate calculator.

Depending on how long you have had the emergency tax rate, it could vary. It all depends on how long you have had the emergency tax code on your name.

Depending on your role, you may also be able to claim tax relief on other items, such as your uniform or work tools. Use our rebate calculator to find out what you may be able to claim.