If you’ve looked at your payslip and seen a confusing mix of letters and numbers under “tax code,” you’re not alone. Many UK taxpayers find these codes puzzling, but they are important for your finances. Your tax code decides how much of your income gets taxed, what part is tax-free, and whether you might get a refund or face an unexpected bill.
Recently, there has been a warning from HMRC about people being taxed incorrectly, often under codes like the BR tax code. This has led to many individuals overpaying their taxes by hundreds or even thousands of pounds. At Clarkwell & Co. Chartered Certified Accountants in London, more clients are asking questions like, “Why is my payslip showing the BR tax code?” or “Am I paying too much tax in the UK?”
This post will explain tax codes, help you check your tax code easily, and guide you on what to do if you find yourself with the wrong tax code in the UK.
What Is a Tax Code and Why Does It Change?
Your tax code is not just random letters and numbers. It tells your employer or pension provider how much income tax to take from your pay. The numbers show how much of your income you can keep tax-free, and the letters indicate your tax situation.
Tax codes can change based on your life events. If you start a second job, switch employers, receive benefits, or owe money to HMRC, your tax code may be updated. However, these changes don’t always reach your employer correctly, which can cause problems with your tax code and lead to mistakes.
Sometimes, people get emergency tax codes. These are temporary and often too cautious, causing them to lose more money than necessary.
The BR Tax Code: What It Means and Why It’s Risky
The BR tax code stands for Basic Rate. It is a common emergency tax code, but it can cause problems. With this code, 20% of your earnings are taxed without any personal allowance. This means you pay tax on all your income, even if you have some tax-free income.
For example, the standard personal allowance in the UK is £12,570. If you’re on the BR code, you lose this allowance and could pay over £2,500 more in taxes each year. This often happens when your employer hasn’t received the right tax code from HMRC or hasn’t applied it correctly.
Many employees wonder, “What does BR mean on my payslip?” and are surprised to find out it costs them money.
BR vs 1112LX: What’s the Difference?
People often ask, “What’s the difference between BR and 1112LX tax codes?” Here’s a simple explanation:
- BR: All earnings are taxed at 20% with no tax-free allowance.
- 1112LX: This code includes a tax-free allowance of £11,120, and the ‘X’ shows it’s a temporary code used for mid-year changes.
The difference between BR and 1112LX matters because it can change how much money you take home. If you’re on BR but should be on 1112LX, you might be paying too much income tax and may need to fix it retroactively.
Why These Errors Happen in the First Place
Most wrong tax code issues in the UK come from mistakes in administration:
- Your employer hasn’t received or used the new code from HMRC.
- You’ve started a new job, and your old PAYE details didn’t transfer correctly.
- HMRC has old income information.
- You didn’t submit your P45, or you didn’t get a new P2 notice.
Sometimes, employers use a default emergency tax code when they are unsure which code to apply. Unfortunately, these defaults usually don’t benefit you. In most cases, the problem arises from poor communication between HMRC and employers.
How to Check and Understand Your Tax Code
It’s now easier to check your tax code and understand it. Here’s how to do it in less than five minutes:
- Go to your Personal Tax Account.
- Log in with your Government Gateway ID or create one if you don’t have it.
- Find the “Pay As You Earn (PAYE)” section.
- Look at the tax codes for all your jobs.
Compare these with the tax code on your payslip. If they don’t match, take action. Your employer might not notice the mistake, so checking yourself could save you a lot of money.
How to Fix HMRC Tax Code Errors Quickly
What to Do If You Find a Mistake
If you find a mistake, call the HMRC tax helpline at 0300 200 3300. They are available Monday to Friday from 8 am to 8 pm and Saturday from 8 am to 4 pm. Make sure to have your National Insurance number, current tax code, and employer details ready.
Request that HMRC send the correct code to your employer. Changes usually take effect within 1-2 pay periods. If you are due a refund, it will either show up in your payslip or be calculated later with a P800 tax calculation.
At Clarkwell & Co., we help individuals and businesses fix these issues through our HMRC Investigation Service in London. You don’t have to do this alone.
Real Stories: Tax Code Changed Without Notice UK
Here are some real examples. One client started a new job and noticed their taxes were too high. We found out they had the wrong BR tax code for six months. After checking again, we discovered they had overpaid £1,278 in income tax.
In another case, a freelancer worked two jobs. One employer used an old tax code, and the other used an emergency tax code. We found the mistake, contacted HMRC, and got them a refund for past overpayments.
These problems can be annoying, but they can be fixed and happen more often than you think.
Why Fixing It Matters for Your Financial Health
When you pay too much income tax in the UK, it impacts more than just your money. It disrupts your budget, savings, and financial goals. Many clients struggle to make mortgage payments or pay bills because of incorrect net pay.
At Clarkwell & Co., our Budgeting and Forecasting service in London helps people create realistic financial plans. The first step is ensuring you have the right income, which begins with the correct tax code.
Fixing your tax code is important not just for getting back what you deserve, but also for regaining your financial stability.
Employers, Take Note: Your Role in Tax Code Accuracy
Employers are important in stopping and fixing tax code mistakes. When HMRC gives a new tax code, payroll must apply it quickly.
At Clarkwell & Co., our Bookkeeping Services in London keep your records accurate and current. We help business owners set up systems that automatically connect with HMRC, which lowers errors and employee frustration.
A knowledgeable payroll team ensures compliance and builds trust with employees.
Overpaid or Underpaid? What to Do Next
If you think you’ve paid too much tax:
- Check your payslips and tax code history.
- Reach out to HMRC for a P800 calculation.
- You can file a claim online or wait for HMRC to handle it automatically.
If you owe money, HMRC may send you a notice to adjust your future pay to cover the amount due. In some cases, you might get a bill directly.
You can also fix mistakes from previous tax years. We can help with these claims as part of our tax and VAT Return Services in London.
When to Seek Professional Help
If you’re confused about where to begin, feeling overwhelmed by paperwork, or managing different incomes, a tax professional can help make things easier.
At Clarkwell & Co., our experts can:
- Check your income and tax history
- Communicate with HMRC for you
- Help you get back any money you overpaid
- Avoid future mistakes with your tax code
Whether you work as an employee, contractor, or business owner, we’ll make sure you only pay what you legally need to.
Your Action Plan: Don’t Let HMRC Get It Wrong
To prevent tax losses:
- Regularly check your tax code, especially after changing jobs.
- Ensure your employer has your P45 or starter checklist.
- Call the HMRC tax helpline if your payslip code seems wrong.
- Keep records of your payslips and any letters from HMRC.
- Reach out to Clarkwell & Co. for help with reclaiming overpaid tax.
Stay proactive. Don’t let HMRC mistakes affect your finances.
Take Back Control of Your Tax
HMRC tax codes can be confusing, but they affect your money. If you have a BR tax code or an unusual code like 1112LX, you might be losing thousands of pounds over time.
We urge all UK taxpayers to check their tax codes regularly and take action if something seems wrong. Clarkwell & Co. is ready to help. Our team can quickly and easily resolve these issues for individuals and businesses.
If you think this affects you, don’t wait. Take action now and regain control of your income.
