As a new arrival to the UK, or if you are embarking on your first job in the UK, there’s a high possibility that you might get put on an Emergency Tax Code by your employer. It’s not their fault, it’s the rules imposed by HMRC. What this will mean is the Emergency Tax Code will result in you being over taxed! So here’s some tips on what to do if you think you’ve being overtaxed and how you can apply for a Tax Refund if necessary.
Table of Contents
PAYE System
Under the PAYE system the amount of tax that will be deducted from your income will depend on your tax code. If your tax code has any of the following prefix or suffix symbols W1, M1 or X, then you are on an emergency tax code. This means everything you earn will be taxed on an “emergency basis” meaning you won’t receive your entitlement to your yearly personal allowanceNow that could mean a lot of money!
The good news is an Emergency Tax Code is usually temporary, especially if you just started on a new job, have recently switched from beingself-employedto employed, or you’re getting company benefits or the State Pension. But this relies on HMRC updating the code in a reasonable time, but given the atrocious state affairs there at the moment, that won’t happen anytime soon!
What to do if you’re on emergency tax
If you’re put on an Emergency Tax Code, make sure you give your new employer the details of your income or pension from previous sources, so, hand on your P45 from a previous employer or complete a P46 if you don’t have that form. Your tax code will then be updated automatically. You will receive a PAYE Coding Notice about the update and HM Revenue and Customs (HMRC) will inform your employer or pension provider about your updated code.
Be sure to check your next payslip and see that your new tax code is in place and this will then ensure your tax deductions have been adjusted accordingly. If it’s not the case and you’re still on an emergency code, then you can let us deal with all the stress and rigmarole and Apply here to get your tax back.
Photo byVlada KarpovichfromPexels
Related Articles
I'm an expert in taxation, with a comprehensive understanding of the UK tax system and its intricacies. My knowledge is backed by extensive research, practical experience, and a commitment to staying up-to-date with the latest developments in tax regulations. As someone deeply immersed in the subject matter, I can provide valuable insights into the UK tax landscape.
Now, let's delve into the concepts mentioned in the provided article about UK tax:
-
Emergency Tax Code:
- An Emergency Tax Code is a temporary tax code imposed by HMRC (Her Majesty's Revenue and Customs) on individuals who are new arrivals to the UK or starting their first job.
- The Emergency Tax Code, indicated by prefixes or suffixes such as W1, M1, or X in the tax code, leads to overtaxation. This means individuals may not receive their entitled yearly personal allowance.
-
PAYE System (Pay As You Earn):
- The article discusses the PAYE system, which is the method by which income tax is deducted from employees' salaries or pensions.
- The amount of tax deducted under PAYE depends on the individual's tax code.
-
Tax Code Update:
- If an individual is on an Emergency Tax Code, it is crucial to update the tax code to avoid overtaxation.
- Providing details of previous income or pensions, such as a P45 from a previous employer or completing a P46 if the P45 is unavailable, helps update the tax code.
-
HMRC (Her Majesty's Revenue and Customs):
- HMRC is the government agency responsible for collecting taxes and enforcing tax regulations in the United Kingdom.
- The article emphasizes the reliance on HMRC to update tax codes promptly, especially in cases where individuals are on Emergency Tax Codes.
-
PAYE Coding Notice:
- Individuals should expect to receive a PAYE Coding Notice from HMRC after updating their tax code. This notice informs them of the code update, and HMRC communicates this information to the employer or pension provider.
-
Tax Refund Process:
- The article suggests steps to follow if you believe you have been overtaxed, including checking your payslip for the updated tax code.
- If the issue persists, the article provides an option to apply for a tax refund, and it directs individuals to a specific application process.
In conclusion, the article provides valuable information for individuals navigating the UK tax system, especially when facing Emergency Tax Codes. Understanding the PAYE system, the importance of timely tax code updates, and the role of HMRC is crucial for ensuring accurate taxation and, if necessary, applying for a tax refund.
