Emergency tax code - no tax-free allowance

[snettles]

I'm hoping you can help me advise a friend. They've just been made redundant 7 weeks into a new job. Their first month's pay was lower than they expected, but put it down to it not being a full working month. The second (full) month the pay was again less than they expected. (Expectations were based on using an online 'after tax' salary estimator).

Having looked at their two pay slips, they've been put on a BR emergency tax code, which I understand means they have no tax free allowance and so have had 20% tax deducted from their entire gross pay. This was their only job (entry level too) and they had no other source of income whilst working it. They also weren't asked for their P45 on joining the company.

The former employer (very small business) is maintaining this was the right thing to have done and that it'll be made up by paying less tax over the course of the year. I get that, but it's obviously less cash in the bank right now on an entry level salary. Am I right in thinking there are other emergency tax codes that do include the tax free personal allowance that should have been used instead? And does my friend have any way of claiming back any overpayment, other than a tax adjustment over the course of the year, or rebate at the end of it?

With no P45 they should have filled in a P46. Without either the employer was right to use BR. The other emergency code is to use the normal (sorry not up to date with this year's rates) code on a "week one" rather than cumulative basis.

They can get the tax back through their wages if they start a new job. Otherwise you used to be able to apply for a rebate directly from the tax office on a P50 after 4 weeks - not sure if that is still the case but you could try googling P50.

In the absence of a P45, the employer should definitely have used P46 and a non-cumulative normal tax code, not BR.

They will get it back once they start a new job in this tax year. Make sure they give new employer P45, and keep an eye on their tax code on first and second payslip.

It’s all live now, if your friend rings hmrc she will get her tax back from the employer next month.

I had a similar thing happen to me when I started a new job. I went online to the gov.uk website and filled out a form. There was also a telephone number. I had the money repaid to me after the start of the new tax period (they sent the money direct to my bank)

Theoretically, they should get it back automatically, as employer has to inform HMRC via RTI and HMRC will know it's only employment and adjust code.

However, it's probably worth registering for an online tax account or contacting the HMRC Employee Helpline.

X-post 🙂

She can only claim the tax back from HMRC if she signs to say she will be unemployed for the rest of this tax year.

The best thing for her to do is to get another job, she will get it refunded in her pay packet.

Sorry, I was offline the last couple of days, but thank you for your replies!