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Emergency Tax

Emergency Tax

It is sometimes necessary for an employer or pension provider to put (usually new) employees on an emergency tax code, until HMRC has worked out what that employee’s tax code for the year should be. It usually happens when HMRC do not know enough about the employee’s income or tax details for the full year.

The emergency coding applicable for any tax year is advised to employers in the HMRC Form P9X  –  Tax codes to use from 6 April.The emergency coding, which is in the form of a numeric tax code with the suffix letters L X, L W1 or L M1, is often used for new employees. The number is the basic personal allowance divided by 10. For example the  basic personal allowance for the tax year 2015/16 is £10,600 therefore the emergency taxcode is ‘1060L X’. It only gives the basic personal tax allowance in calculating the tax payable via PAYE and it is normally replaced by a correct code once HMRC has all of the necessary employee information. The emergency code can be operated cumulatively or non-cumulatively (W1/M1) across the various rates of tax.

Use of emergency tax code non-cumulatively

The emergency tax code is used non-cumulatively where the employee:

  • does not have a From P45 and answers B on the starter checklist employee statement that this is now their only job but since last 6 April they have had another job or received taxable Jobseekers Allowance, Employment and Support Allowance or taxable incapacity benefit and they do not receive a state or occupational pension.
  • is taken on or after 6 April and his or her Form P45 is for a tax year before the tax year just ended, eg the employment starts on 1 May 2015, but the Form P45 is dated 24 November 2013 and the employee answers B on the starter checklist employee statement; or
  • is taken on after a prescribed date (normally 24 May) in the current tax year and his or her Form P45 is dated for the tax year just ended.

Emergency Tax

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