How Much is Emergency Tax?

Emergency tax means your income is taxed at 20%, 40%, or 45% without personal allowance. Learn why it happens, how to fix it, and claim refunds.

If you’ve started a new job, received a lump sum payment, or withdrawn from your pension, you might find that emergency tax has been applied to your earnings. Emergency tax can result in higher deductions because HMRC doesn’t have full details of your income.

This guide explains how emergency tax works, when it’s used, how much is deducted, how to fix it, and whether small businesses and pensions are affected.

What is Emergency Tax?

Emergency tax is a temporary tax code applied when HMRC doesn’t have enough information about your earnings. It often means:

  • You don’t receive your tax-free personal allowance (£12,570 for 2024/25).

  • Your income is taxed at 20%, 40%, or 45% from the first pound earned.

  • Once your tax code is corrected, you can claim back overpaid tax.

When Are Emergency Tax Codes Used?

HMRC may apply an emergency tax code if:

  • You start a new job without a P45 from your previous employer.

  • Your employer doesn’t have full tax details from HMRC.

  • You move from self-employment back into PAYE.

  • You start receiving a pension or withdraw a lump sum from your pension pot.

  • Your tax code changes due to job benefits, bonuses, or multiple jobs.

Common Emergency Tax Codes

Emergency Tax CodeWhat It Means1257L W1/M1Your tax-free allowance is applied to each pay period separately (Month 1 Basis).0TNo personal allowance applied—full income taxed at 20%, 40%, or 45%.BRAll income taxed at 20% (Basic Rate).D0All income taxed at 40% (Higher Rate).D1All income taxed at 45% (Additional Rate).

If you see W1 (Week 1), M1 (Month 1), or X next to your tax code, it means your tax is being calculated on a non-cumulative basis—ignoring previous earnings and tax payments.

How Does Emergency Tax Work?

With emergency tax, HMRC assumes you don’t have any unused personal allowance, so your entire income is taxed.

  • If you earn up to £50,270, you’ll be taxed at 20%.

  • If you earn between £50,271 and £125,140, you’ll be taxed at 40%.

  • If you earn over £125,140, you’ll be taxed at 45%.

Example of Emergency Tax Deduction

Scenario: You Start a New Job Without a P45

  • Your salary: £2,500 per month (£30,000 per year)

  • Normal tax code (1257L): First £12,570 tax-free → Tax on remaining £17,430.

  • Emergency tax code (0T): No tax-free allowance → Entire £30,000 taxed.

Tax Paid with Normal Code:

  • £12,570 tax-free

  • £17,430 taxed at 20% = £3,486

  • Total tax: £3,486 per year

Tax Paid with 0T Emergency Tax Code:

  • £30,000 taxed at 20% = £6,000

  • Total tax overpaid: £2,514

If your tax code is corrected, HMRC will refund the overpaid tax through payroll or a tax rebate claim.

Emergency Tax and Small Businesses

If you run a small business and employ staff, you may accidentally apply emergency tax to your employees if:

  • They don’t provide a P45 from a previous job.

  • They haven’t filled out a Starter Checklist.

  • HMRC hasn’t assigned them the correct tax code yet.

How to Avoid Emergency Tax for Employees

  • Ensure new hires provide a P45 or fill out a Starter Checklist.

  • Use HMRC’s PAYE online service to check tax codes.

  • Apply any tax code updates from HMRC immediately.

If an employee is on emergency tax, they should contact HMRC to get it corrected.

How to Correct a Tax Code

If you’re on an emergency tax code, take these steps to correct it:

  1. Check Your Payslip – If your tax code includes W1, M1, or X, it’s temporary.

  2. Provide Your P45 – If you started a new job, give your employer your P45 from your previous employer.

  3. Complete a Starter Checklist – If you don’t have a P45, fill out HMRC’s Starter Checklist (available here).

  4. Log into Your HMRC Account – (https://www.gov.uk/check-income-tax) to check your tax code.

  5. Contact HMRC – Call 0300 200 3300 to request a tax code review.

  6. Wait for Your Employer to Apply the New Code – Once HMRC updates your tax code, your employer will adjust your future payslips automatically.

Do I Pay Emergency Tax on Pension Withdrawals?

Yes, if you withdraw money from your pension (outside of regular pension payments), HMRC may apply emergency tax.

How Pension Emergency Tax Works

  • The pension provider assumes you will withdraw the same amount every month and taxes it accordingly.

  • This often results in higher tax deductions on one-off withdrawals.

Example: £10,000 Pension Withdrawal

  • Normal tax treatment:

    • £2,500 tax-free (25%)

    • £7,500 taxed at 20% = £1,500 tax deducted

  • Emergency tax treatment (Month 1 Basis):

    • Full £10,000 taxed at 20% = £2,000 tax deducted

    • Overpaid tax = £500

How to Claim a Pension Tax Refund

If you overpaid tax on a pension withdrawal, claim a refund from HMRC using:

  • P53 form (if the pension is fully withdrawn).

  • P55 form (if only part of the pension is taken).

  • P50Z form (if no further income is expected).

Final Thoughts

Emergency tax can lead to overpaying tax, but it is temporary and can be corrected. If you find W1, M1, or 0T on your tax code, check your payslip, update your details with HMRC, and claim a refund if necessary. If emergency tax is applied to pension withdrawals, a tax rebate may also be due.