HM Revenue and Customs (HMRC) has issued a direct alert to every household in the United Kingdom, placing the onus firmly on individual workers to ensure their tax codes are correct. The tax authority, under the current Labour Party government, has explicitly stated that it is not the responsibility of an employer to manage an employee's tax code.
You Are Responsible for Your Tax Affairs
In a clear statement, HMRC emphasised that "everyone is responsible for ensuring their own tax code is correct." The body directs taxpayers to manage and update their details swiftly using the official HMRC app or their online tax account. This shift highlights a move towards personal tax management, distancing the process from employer-led oversight.
How to Identify an Emergency Tax Code
Many workers fall onto an emergency tax code when starting a new job, which can lead to incorrect tax deductions. You are likely on an emergency code if your tax code ends in specific suffixes. For weekly pay, look for 'W1' (e.g., 1257L W1). For monthly pay, it will end in 'M1' (e.g., S875L M1). If your pay dates vary, the code may end in 'X' (e.g., C663L X).
Depending on your employer's payroll software, you might also see the term 'NONCUM' on your payslip. If your code does not feature W1, M1, X, or NONCUM, you are not on an emergency tax code.
Why Emergency Codes Cause Problems
Normally, your annual tax is calculated on your total cumulative income for the tax year. However, an emergency tax code works differently. It calculates tax based solely on what you earn in that specific week or month, as if you were going to earn that same amount every pay period for the entire year.
This non-cumulative method often results in you paying the wrong amount of tax—frequently too much. It typically happens when a new employer starts your payroll without having your previous income and tax details, such as a P45 from your last job.
How to Get Your Tax Code Corrected
To avoid emergency taxation, you should provide your new employer with a P45 from your previous job. If you did not receive one, you must request it from your former employer. This document provides the necessary details to assign the correct tax code from the start.
If you are placed on an emergency code, HMRC will usually update it once they receive all your income details from your current and previous employers. This process can take up to 35 days from your job start date. The updated code will be sent to both you and your employer.
If you have underpaid tax, you will likely remain on the emergency code until you have paid the correct annual amount. Conversely, if you have overpaid due to an emergency code, you are entitled to claim a tax refund from HMRC.
The key takeaway from this warning is proactive engagement: regularly check your payslip and your tax code via your personal tax account to ensure you are not paying more than you owe.
