In this section:
- Tax codes - the basics
- Understanding your PAYE Coding Notice
- Emergency tax codes
- Company benefits in your tax code
- Expense payments in your tax code
- Pensions, state benefits and your tax code
- Other income taxed through your tax code
- How underpayments of tax affect your tax code
- If you have more than one tax code
- What to do if your tax code is wrong
Emergency tax codes
Sometimes your employer or pension payer will have to put you on an 'emergency' - or 'special basis' - tax code until we've worked out what your correct tax code for the year should be. This usually happens when we don't know enough about your income or tax details for the full tax year.
What is an emergency tax code?
An emergency tax code is a code that your employer or pension payer uses on a special basis until we have enough information about your income to enable us to send them (and you) your correct code. It normally makes sure that you get the basic Personal Allowance (and therefore some tax-free pay) but doesn't take into account any other allowances or reliefs you may be entitled to. Your employer or pension payer will normally keep using it until we tell them what your correct tax code should be.
The emergency tax code is set each year and is a number followed by the letter L. The number is the basic Personal Allowance (£6,035 for the tax 2008-09) divided by 10. The emergency code for 2008-09 is therefore 603L.
Depending on how it's worked out, you might also see '603L W1' or '603L M1' (meaning 'Week 1' or 'Month 1' - whereby you get a proportion of the Personal Allowance over the remainder of the tax year).
When you might be put on an emergency tax code
You might get an emergency tax code if:
- you've started a new job and haven't got a P45 from your previous employer for the same tax year
- you've started your first job since the start of the tax year and haven't been receiving any taxable state benefits or a state or company pension
- you've started a new job but you've had another job or other jobs or received taxable state benefits during the year
- you've started a new job and were previously self-employed
- there's been a change in your tax code during the year because, for example, you've started to get company benefits or the State Pension
Learn about tax codes and company benefits
Read about tax codes and your pension
If you're put on a cumulative emergency tax code
You'll usually be put on a cumulative emergency tax code if you've ticked Statement A on your P46 - telling your employer that this is your first job since the start of the tax year and you haven't been receiving any taxable pensions or state benefits.
How a cumulative emergency tax code might affect your wages
The code used in this way will give you your full tax-free Personal Allowance over the remainder of the tax year - that's because your employer can carry forward any tax-free allowance not used in the period before you started your job. (As you've only just started work we assume that you haven't yet used any of your tax-free Personal Allowance.)
Your tax should be about right at the end of the tax year.
If you're put on a week 1 or month 1 emergency tax code
You might be put on a week 1 or month 1 emergency tax code if you've given your employer a P45 Part 3 showing a previously used week 1 or month 1 emergency code or you ticked Statement B on your P46 - telling your employer that you've had another job or taxable state benefits during the year - or your tax code has been reduced by a large amount.
How a week 1 or month 1 emergency code might affect your wages or pension
The code used in this way will give you the remainder of your tax-free Personal Allowance spread over the rest of the tax year. We assume that you've already received some tax-free income in the period before you started your job or your tax code changed.
Week 1 or month 1 emergency codes treat each week or month on its own and give you an equal amount of tax-free pay every payday. As they can't take into account changes in your income or tax which may have happened earlier in the year your tax may not be exactly right at the end of the year.
How to get on to the correct code - and get a tax refund
Once we have details of your previous income and tax paid for the tax year, we'll send your employer (and you) your full (correct) tax code. Your employer will deduct the correct tax in future and refund any overpaid tax. That's why it's very important that you give us any information we ask you for.
Getting a refund at the end of the tax year
If you think you've paid too much tax because you've been taxed on an emergency code you should claim a refund by contacting us. You'll need to provide us with a P60.
Find out more about claiming a refund
