Audience: New starters, job changers
If you have recently started a new job, left a job, or had a change in your employment circumstances, there is a good chance you may have encountered an emergency tax code on your payslip. Emergency tax codes are applied when HMRC or your employer does not have enough information to work out your correct tax code, and they frequently result in you paying more income tax than you should.
The good news is that emergency tax codes are temporary and can be corrected. Understanding what they are and why they are applied puts you in a much stronger position to resolve the issue quickly and reclaim any overpaid tax.
In the UK, the emergency tax code for 2024/25 is 1257L W1 (for weekly pay) or 1257L M1 (for monthly pay). The number 1257 reflects the standard personal allowance, but the W1 or M1 suffix is what makes it an emergency code. These suffixes stand for 'Week 1 basis' and 'Month 1 basis' respectively.
The critical difference between a normal tax code and an emergency code is how tax is calculated. Under a normal (cumulative) tax code, your employer calculates your income tax based on your total earnings from the start of the tax year, taking into account any personal allowance you have already used. If you earned nothing in the first three months of the year, for example, that unused allowance would reduce your tax in subsequent months.
Under an emergency (non-cumulative) code, your employer calculates tax on each pay period in isolation — as if you were earning that amount every week or month of the year. This means that any unused personal allowance from earlier in the year is ignored, and you typically pay more tax than you should.
The most common trigger for an emergency tax code is starting a new job without providing a P45 from your previous employer. Your P45 is a document that shows your total earnings and tax paid up to the point you left your previous job. It allows your new employer to set up the correct cumulative tax code from the outset.
If you cannot provide a P45 — because you lost it, or because you were not previously employed — your employer should ask you to complete a starter checklist. The checklist includes a declaration about whether you have other jobs or other sources of income, and helps HMRC determine the right code. If the checklist is not completed or is completed incorrectly, an emergency code may still be applied.
Emergency codes are also sometimes applied when HMRC needs more time to process a change in your circumstances, or when there has been a processing delay in your new employer's payroll system.
The amount of overpayment caused by an emergency code depends on when in the tax year you start your new job and what happened with your income before that point. The impact is greatest for those who start a new job after a period of no income — for example, if you were unemployed for several months.
As a rough example, consider someone who earns £30,000 per year and starts a new job in October, having had no income since April. Under a cumulative code, their employer would recognise that they have six months of unused personal allowance and tax them accordingly — possibly at zero or very low rates initially. Under an emergency code, they would simply be taxed as if £30,000 were their annual salary, with no recognition of the unused allowance.
Over the course of a few months, this could result in hundreds of pounds of overpaid tax — money that you are entitled to reclaim.
The fastest solution is to provide your new employer with your P45 from your previous job. If you cannot find your P45, contact your previous employer and ask them to issue a duplicate. Once the P45 is provided, your employer should update your payroll records and issue a corrected tax code.
If your previous employer cannot provide a P45, or if you were not previously employed, contact HMRC directly. You can do this by phone on 0300 200 3300, through your Personal Tax Account online, or by post. Explain your situation and HMRC will issue the correct tax code directly to your employer.
Once the correct cumulative code is applied, your employer's payroll system will automatically recalculate your tax for the year to date and adjust your next pay accordingly. If you have overpaid, you should see a reduction in your tax deduction — or a refund payment — in your next payslip.
If the tax year has already ended and you overpaid tax due to an emergency code, you can still claim a refund. HMRC may issue a P800 tax calculation automatically after the year end. If you do not receive one and believe you are owed money, contact HMRC directly or use your Personal Tax Account to request a review.
You can also claim refunds for up to four previous tax years, so if you were on an emergency code in previous years and never had the tax corrected, it is worth checking whether you are owed a refund.
**Disclaimer: ***This article is for general information purposes only and does not constitute tax advice. Tax rules can change and individual circumstances vary. Always consult a qualified tax adviser or contact HMRC directly for advice specific to your situation.*