What is the emergency tax code? It can be difficult to understand emergency tax, especially if you haven’t been put on an emergency tax code before.
In most cases, you’re unable to avoid emergency tax. However, it’s possible to minimise the chances of receiving an emergency tax code by ensuring that HMRC is aware of any vital changes regarding your circumstances.
Although getting an emergency tax code isn’t anything to be concerned about, it’s beneficial to better understand what it is and why you’ve received one. To learn more about emergency tax codes, continue reading our guide.
Understanding the Emergency Tax Code
It’s important to understand emergency tax codes. Usually, you’ll receive an emergency tax code if HMRC doesn’t have your income details in time after a change in circumstances. If you get an emergency tax code, it’s probably because you’ve not alerted HMRC of a recent job change.
Additionally, you’ll likely be issued an emergency tax code if you begin working with an employer after being self-employed for some time, receive company benefits or a state pension, or HMRC simply doesn’t have enough information to provide you with the correct tax code.
Don’t be alarmed if you receive the wrong tax code; emergency tax codes are a temporary measure until the end of the tax year or whenever you receive the right tax code. However, it’s important to know that if you do get an emergency tax code, you’re likely to not receive any tax-free personal allowance.
Essentially, this means you’ll end up paying more income tax. Paying more taxable income isn’t ideal, but in this circumstance, it’s usually unavoidable. Noticing whether you’ve received an emergency tax code is simple; if your payslip contains W1, M1, or X, it means you’re on an emergency tax code.
Although receiving an emergency tax code can be frustrating in some aspects, HMRC will update your tax code once they receive the correct details or until you have paid the correct amount of tax.
Can You Claim Back Emergency Tax?
Yes, you can claim back emergency tax. If you’ve paid too much tax while being on an emergency tax code, you’ll need to contact HMRC to see if you’re able to claim it back. Using your P800, you’ll be able to see whether you’re due a refund.
HMRC will let you know how they plan on repaying you via letter, but this varies. Typically, HMRC uses bank transfers or cheques to complete repayments if you pay too much tax.
It’s vital to ensure that the calculations completed by HMRC are in accordance with your records within your personal tax account before receiving a refund from them.
If HMRC accepts your claim, be expecting to wait anywhere from a few days up to 8 weeks for a payment. Usually, the time frame in which you’ll have to wait depends on whether you’re reclaiming work-related earnings or earnings from your pension.
If you notice an emergency tax code on pension income, be sure to get in touch with both your pension provider and HMRC; although they sometimes automatically process refunds, you could be waiting a while.
Key Details
Before approaching HMRC, it’s crucial to have key details to hand. When it comes to claiming emergency tax refunds, HMRC will require important information. Without this information, you might not be able to receive a refund. Some key details that are required include the following:
- Your full name
- Address
- Date of birth
- National Insurance Number
- Your employer
- Your pension provider
- Estimate of your earnings
Dealing With Emergency Tax
There are little ways to avoid receiving an emergency tax code. However, keeping up to date with tax payments and notifying HMRC of any change in your circumstances can help lower the chances of receiving an emergency code. We’re required to pay tax, but knowing that you’re paying more due to failure to update HMRC can be difficult to comprehend.
At LJS Accounting Services, we work closely with clients to ensure they’re handling their finances correctly. We offer tailored tax services, helping clients complete tax returns and plan their affairs accurately.
We support, guide, and advise clients, letting them know how much they need to pay and when. Our team are reliable and friendly, providing a service that’s second to none. If you require any additional information or want to talk to a member of our team about how we could help you, get in touch today. We look forward to hearing from you.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.
