Are you tired of being charged emergency tax? Well, I’ve got some good news for you! There are ways to stop this bothersome issue and avoid any future headaches. In this article, I’ll be sharing some helpful tips on how you can prevent getting charged emergency tax and save some money in the process.
Let’s be honest, being hit with an emergency tax charge is never a fun experience. It can be frustrating and confusing, especially if you’re unsure of why it’s happening to you. Fortunately, there are a number of things you can do to stop being charged emergency tax. From updating your tax code with HM Revenue & Customs (HMRC) to making sure your employer has your correct information, these simple steps can make all the difference.
By following the advice in this article, you’ll be able to keep more of your hard-earned money in your pocket. So why wait? If you’re sick and tired of being hit with emergency tax charges, read on to discover the various ways you can tackle this issue head-on and avoid any further financial setbacks.
Understanding emergency tax
Emergency tax is a type of temporary tax code that is used by HM Revenue and Customs (HMRC) when they do not have enough information about an employee’s income. It is also applied when an employee starts a new job without a P45 form or a National Insurance number.
It is important to note that emergency tax codes are often higher than the amount of tax an employee should be paying. This means that the employee will end up paying more tax than they should be until the tax code is updated.
Common causes of emergency tax
- Starting a new job without a P45 form
- Not providing a National Insurance number to the employer
- Not submitting a tax return for the previous year
- Changing from self-employment to employment
The impact of emergency tax
Being charged emergency tax can be a frustrating experience for employees as it can result in them being paid less than they are expecting. It can also result in overpaying tax, which can be time-consuming and stressful to reclaim.
It is important for employees to check their payslips regularly to ensure that they are being taxed correctly. If emergency tax has been applied, the employee should contact HMRC to provide the necessary information to update their tax code.
How to avoid emergency tax
The best way to avoid emergency tax is to provide all the necessary information to the employer when starting a new job. This includes a P45 form and a National Insurance number.
| Information required to avoid emergency tax | Where to find it |
|---|---|
| P45 form | Previous employer |
| National Insurance number | National Insurance card or letter from HMRC |
It is also important for employees to ensure that they submit their tax return for the previous year, if required. This will help HMRC to calculate the correct tax code and avoid emergency tax being applied.
How emergency tax affects your income
Emergency tax can have a significant impact on your income, resulting in unexpected deductions from your paycheck. Here are some ways emergency tax can affect your income:
- Lower net income: Emergency tax means you’ll have less money in your paycheck than you’d expect. This can put a strain on your finances, particularly if you’re already struggling to make ends meet.
- Higher tax bill: Emergency tax is usually charged at a higher rate than standard tax, which means you may end up with a larger tax bill at the end of the year if you’ve been paying emergency tax for a prolonged period.
- Delayed refunds: If you’ve overpaid emergency tax during the year, you may be entitled to a refund. However, this process can take time and may result in a delayed refund, which can be frustrating when you need the money.
If you find yourself in a situation where you’re being charged emergency tax, it’s important to take action to rectify the situation as soon as possible. You can do this by:
1. Contacting your employer: If you believe you’re being charged emergency tax in error, speak to your employer. They may be able to rectify the situation quickly and prevent further deductions from your paycheck.
2. Registering for self-assessment: If you’re self-employed or have additional income sources, registering for self-assessment can help ensure you’re paying the correct amount of tax each year. This can prevent emergency tax from being charged in the future.
3. Keeping records: Keep detailed records of your income and any deductions from your paycheck. This will help you to identify any errors and ensure you’re paying the correct amount of tax.
| Income bracket | Emergency tax rate |
|---|---|
| Up to £12,570 | 20% |
| £12,571 – £50,270 | 40% |
| Over £50,270 | 45% |
Knowing how emergency tax affects your income can help you to take action and prevent financial stress down the line. By staying on top of your financial affairs, you can ensure you’re paying the correct amount of tax, avoiding unexpected deductions from your paycheck, and keeping your finances in check.
Reasons why you might be charged emergency tax
When starting a new job or changing jobs, it is important to ensure that you do not get charged emergency tax. Failing to do so can result in you paying more tax than necessary, which can be frustrating. Here are some reasons why you might be charged emergency tax:
- You have started a new job and your employer has not received your P45 from your previous employer.
- Your current tax situation is unclear, for example, you have just become self-employed or you have started to receive income from a rental property.
- You have provided your employer with incorrect information, such as your National Insurance number or the wrong tax code.
One of the main reasons you may be charged emergency tax is because your employer does not have all the information they need to calculate your tax correctly. For instance, if you have changed jobs and did not provide your P45 form from your previous employer, your new employer will not have all the necessary information about your taxable pay and tax code. This can lead to an incorrect calculation of your pay and, as a result, emergency tax is deducted from your earnings.
Another reason why you may be charged emergency tax is if you have just started self-employment or have started to receive income from a rental property. In this case, your tax situation may be unclear, and HMRC may not have all the information they need to assign you a tax code. Therefore, you will be charged emergency tax until your tax situation has been reviewed and a tax code assigned.
Finally, providing incorrect information to your employer, such as your National Insurance number or the wrong tax code, can also result in emergency tax being deducted from your earnings. It is important to ensure that the correct information is provided to your employer at the beginning of your employment to avoid this.
| Reasons why you might be charged emergency tax: |
|---|
| You have started a new job and your employer has not received your P45 from your previous employer. |
| Your current tax situation is unclear, for example, you have just become self-employed or you have started to receive income from a rental property. |
| You have provided your employer with incorrect information, such as your National Insurance number or the wrong tax code. |
If you find yourself being charged emergency tax, it is important to get in touch with HMRC as soon as possible. They will be able to advise you on what steps you need to take to ensure that you are not overpaying tax. By doing so, you will be able to avoid any unnecessary deductions from your earnings and ensure that you are paying the correct amount of tax.
How to Reclaim Emergency Tax
If you have been charged emergency tax, there are several steps you can take to get it back. Here are some ways to reclaim emergency tax:
- Contact your employer: If you believe that you have been charged emergency tax in error, you should first talk to your employer. They can review your tax code and make any necessary corrections.
- Fill out a P50 form: If you have overpaid tax, you can use the P50 form to claim a refund. This form can be downloaded from the HMRC website or requested by phone. You will need to provide information on your income and the tax you have paid.
- Claim via your self-assessment tax return: If you are registered for self-assessment, you can claim any overpaid tax when you file your annual tax return. Make sure you keep accurate records of your income and tax payments throughout the year.
It is important to note that you only have a certain amount of time to claim back emergency tax. If you are unsure about how to proceed, you should contact the HMRC helpline.
If you have not been able to reclaim emergency tax through any of these methods, you may be able to claim via the PAYE refund scheme. This scheme is designed to help employed individuals who have overpaid tax or been charged emergency tax in error. The amount you can claim will depend on your circumstances.
| Income for the year | Tax overpaid |
|---|---|
| Up to £30,000 | Up to £2,000 |
| £30,000 – £40,000 | Up to £2,500 |
| Over £40,000 | Up to £3,000 |
To claim via the PAYE refund scheme, you will need to fill out a form P87. You can do this online or by post. Make sure you provide accurate information on your income and tax paid.
Ways to Prevent Emergency Tax
Getting hit with emergency tax can be frustrating, but luckily there are ways to prevent it. Here are some tips to help you avoid emergency tax:
- Submit your tax return on time. This is the most important step in avoiding emergency tax. Filing your tax return by the deadline will ensure that you’re taxed correctly and don’t get hit with any unexpected charges.
- Check your tax code regularly. Your tax code determines how much tax you pay, so it’s important to make sure it’s accurate. Check it regularly to ensure it reflects your current employment situation.
- Notify HMRC of any changes. If you change jobs or start working for a new employer, let HMRC know as soon as possible. This will help prevent any discrepancies in your tax code or payments.
In addition to these preventive measures, here are some other things you can do to avoid emergency tax:
First, make sure you have all of the necessary paperwork and information before you start a new job. This includes your National Insurance number, P45, and details about any benefits or allowances you are entitled to.
Secondly, it’s important to keep accurate records of your income and expenses. This will help you to fill out your tax return correctly and avoid any errors that could lead to emergency tax.
Finally, if you do get hit with emergency tax, don’t panic. Contact HMRC as soon as possible and explain the situation. They will be able to advise you on what steps to take next and how to avoid any future charges.
| Ways to Prevent Emergency Tax | Advantages |
|---|---|
| Submit your tax return on time. | Ensures you’re taxed correctly and don’t get hit with unexpected charges. |
| Check your tax code regularly. | Helps ensure that your tax code reflects your current employment situation. |
| Notify HMRC of any changes. | Prevents any discrepancies in your tax code or payments. |
By following these tips and staying on top of your taxes, you can avoid emergency tax and ensure that you’re paying the correct amount. Don’t let emergency tax catch you off guard – be proactive and take control of your finances.
Tax Codes and Emergency Tax
If you receive a new job or income, one of the first things you need to check is your tax code. Your tax code is a combination of letters and numbers that determines the amount of personal allowance you’re entitled to. If you’re on a wrong tax code, you’ll probably end up paying more tax than you owe. In turn, this could trigger emergency tax.
Emergency tax, also known as a BR tax code, is a higher tax rate that HM Revenue & Customs (HMRC) charges if it doesn’t have enough information to calculate your correct tax code. This means that your employer will deduct more tax from your salary than necessary to cover for any possible unpaid tax. So, if you’ve been put on an emergency tax code, the chances are you’re paying more tax than you should do.
How to Avoid Emergency Tax?
- Make sure that you have completed your new starter checklist with your employer and provided your P45 (if you have one). This will help your employer calculate your correct tax code and avoid being put on an emergency tax rate.
- If you don’t have a P45, make sure that you notify HMRC. You can do this by filling in a form P46, available on the HMRC website.
- If you still get put on an emergency tax code, contact HMRC as soon as possible. They will be able to update your tax code and refund any overpaid tax.
Understanding Your Tax Code
Your tax code is specific to you and it takes into account your personal allowance, benefits, and any other factors that may affect your tax. For example, if you have a company car, your tax code adjusts to the amount of taxable benefit you receive from your employer. Understanding your tax code is important because it affects the amount of tax you pay. Here are the main things you need to know:
- Your tax code is typically made up of letters and numbers, such as 1250L or K873.
- The numbers in your tax code represent your tax-free income allowance. In other words, the amount of income you can earn before you start paying tax. For example, if your tax code is 1250L, you can earn £12,500 before tax.
- The letters in your tax code determine how much tax is owed. For example, L indicates that you’re entitled to the standard tax allowance, M indicates that you’ve received a tax code adjustment due to marriage, and K indicates that you’ve got benefits or other deductions that exceed your personal allowance.
Tax Code Changes
Your tax code may change over time based on your circumstances. For example, if you get married and your spouse has unused personal allowances, you may be able to transfer some of those allowances to yourself. Alternatively, if you start earning more, your tax code may be adjusted to reflect your higher income.
It’s important to notify HMRC of any changes to your circumstances so they can update your tax code and ensure you’re paying the right amount of tax.
| Tax Code | Description |
|---|---|
| 1250L | Most common tax code for 2021/22 |
| BR | A higher tax rate for emergency tax |
| K | Used when you have taxable expenses that exceed your personal allowances |
| NT | No tax should be taken from your pay |
Understanding your tax code and how it affects your income is crucial. If you’ve been put on an emergency tax code, don’t panic. Follow the steps outlined above to ensure you’re on the right tax code, and avoid overpaying tax unnecessarily.
Seeking Professional Help with Emergency Tax
If you’re struggling with emergency tax and aren’t sure what to do next, seeking professional help from a tax expert is a smart move. Below are some reasons why:
- Expert Advice: A tax expert will have a deep understanding of emergency tax and can provide you with personalized advice that’s tailored to your specific situation.
- Minimizing Your Tax Liability: A tax expert can help you minimize the amount of emergency tax you owe by ensuring that you’re claiming all of the deductions and credits that you’re entitled to.
- Assistance in Filing Your Taxes: If you’re struggling to file your taxes on time or need help filling out forms, a tax expert can provide you with valuable assistance.
When selecting a tax expert to help you with emergency tax, be sure to do your research and choose someone who has experience dealing with these types of tax issues. You can find a qualified tax professional by searching the directory of certified public accountants available from the American Institute of Certified Public Accountants.
Finally, if you need immediate assistance with your emergency tax situation, consider reaching out to the IRS or hiring an attorney with experience in tax law. They can provide additional guidance and support to help you resolve your emergency tax issues quickly and effectively.
Remember, taking advantage of the resources available to you and seeking professional help can make a significant difference in your emergency tax situation.
FAQs: How Do I Stop Being Charged Emergency Tax?
1. What is emergency tax?
Emergency tax is a temporary tax code that HM Revenue and Customs (HMRC) applies to your income. It happens when they cannot identify your correct tax code; usually because you are starting a new job, have multiple jobs, or are working for an employer after being self-employed.
2. Why am I being charged emergency tax?
If you’ve just started a new job or have started working for an employer after being self-employed, HMRC may not know your employment history or how much you have earned during the tax year. As a result, they will apply an emergency tax code to your income until they have more information about your earnings.
3. Can I avoid emergency tax?
The best way to avoid emergency tax is to provide your new employer with your National Insurance number and a P45 (if you have one). This will give your employer the information they need to apply the correct tax code to your income.
4. How do I know if I’m being charged emergency tax?
Your payslip should show if you are being charged emergency tax. If you are, your tax code will start with “emergency”.
5. How do I stop being charged emergency tax?
You can stop being charged emergency tax by contacting HMRC and providing them with your up-to-date employment and income information. Alternatively, you can ask your employer to fill out a starter checklist on your behalf.
6. What happens if I keep getting emergency taxed?
If you keep getting emergency taxed and don’t do anything about it, you could end up paying too much tax. This means it’ll take longer for you to get a tax refund and you could end up losing money in the long run.
Closing Paragraph
Congratulations! You’ve made it to the end of our “How Do I Stop Being Charged Emergency Tax?” guide. We hope you found this article helpful and that you’ve taken away some useful tips to help you avoid emergency tax. Remember, if you’re being charged emergency tax, it’s important to act fast and get in touch with HMRC or your employer to stop it. Thanks for reading and don’t forget to check back in for more useful articles in the future!