• Posted 13th August 2015

Emergency Tax Code Explained

Are you working in the UK? If you are, then a tax code is usually used by your employer or pension provider that tells them how much income tax needs to be deducted from your pay or pension. You get your tax code from your payslips from your employer or pension provider, P45 from an employer when you leave a job, P60 from your employer at the end of each tax year, and a PAYE coding notice. For those born after 5 April 1938, the current tax code is 1060L. You also need to remember that as your Personal Allowance increase, your tax code will also change each year (6 April to 5 April the following year). The letters L, M, N, Y, T, OT, BR, DO, D1, and NT are usually found in the tax code which has a different meaning. If your payslip contains the tax code 1060L W1, 1060L M1 or 1060L X, then you’re on an emergency tax code. So, what does an emergency tax code mean? Well, this code is used by your employer in case your correct tax code is not available. However, such codes are temporary. If you’ve started a new job, or working for an employer after being self-employed, or getting company benefits or the State Pension, you may be put in this tax code. While you’re on an emergency tax code, you have to pay tax on all your income above the basic Personal Allowance (£10,600 for the 2015 to 2016 tax year). After you give your employer the details of your previous income or pension, such tax code will be updated automatically. Then, you will get your new tax code in a PAYE Coding Notice. Have burning questions to ask about tax codes to expert tax accountants? Call 020 7060 9556 right now.