Emergency Tax Explained

One thing that sounds quite drastic in the UK is so-called Emergency Tax.

Now this refers to a tax code that is used before your real tax code is worked out or when your employer doesn't know what your tax code should be.

Typically this might be paid when you start a job and you are earning above the pay as you earn limit, or perhaps if your employer doesn't have a P45 when you start the job so doesn't have the data to hand.

This is a temporary code and should not be in place for long; the tax paid at this code is high and therefore it is quite likely that you are overpaying tax when in emergency tax, however when the correct code comes through you can rest assured that you will get a refund on any tax amount that you have overpaid.