Introduction
When starting a new job or receiving income from sources such as a pension, it is common to be placed on an emergency tax code by Her Majesty’s Revenue and Customs (HMRC). This often happens if HMRC does not have enough information about your income and tax details. However, emergency tax can result in overpaying tax, which is why it’s important to know how to stop it.
What is Emergency Tax?
Emergency tax, also known as emergency tax code, is a temporary tax code used by HMRC when they do not have the necessary information to give you the correct tax code. The emergency tax code for the tax year 2021/22 is 1257L W1, 1257L M1 or 1257L X. It can often lead to you paying more tax than you should. Further details about emergency tax codes can be found on the HMRC website.
Why Might You Be Put on an Emergency Tax Code?
You might be put on an emergency tax code if:
- You’ve started a new job
- You’re receiving company benefits or the State Pension
- You’re receiving a pension that you did not receive last year
How to Stop Paying Emergency Tax
If you’ve been placed on an emergency tax code, don’t panic. Here are the steps you can take to stop paying emergency tax:
- Provide your new employer with a P45: If you’ve recently started a new job, give your P45 form to your new employer. This form will provide them with details of your earnings from your previous job, enabling them to use the correct tax code. If you don’t have a P45, you can get one from your previous employer.
- Fill out a ‘New Starter Checklist’: If you don’t have a P45, you can fill out a New Starter Checklist form provided by HMRC. Your employer will use this information to determine your tax code.
- Contact HMRC: If you’ve been on an emergency tax code for a while and your situation hasn’t changed, you should contact HMRC directly. They can adjust your tax code accordingly. You can reach HMRC by phone on 0300 200 3300 or through their online contact form.
Claiming a Tax Refund
If you’ve overpaid tax due to being on an emergency tax code, you may be entitled to a tax refund. HMRC should automatically readjust your tax code once they have the correct information, and any overpaid tax should be refunded in your next wage. However, if this does not happen, you can claim a refund by contacting HMRC or filling out a P50 or P53 form.
Conclusion
Being on an emergency tax code can be an inconvenience, particularly if it leads to overpayment of tax. But by following the steps outlined above, you can stop emergency tax and ensure you’re paying the correct amount. Remember, if you’re unsure about your tax code or believe you may have overpaid tax, it’s always best to contact HMRC directly.
