What is a BR Tax Code?
BR stands for Basic Rate and means all your income from this source is taxed at 20%.
The code is normally used temporarily until your employer has all of the necessary details to give you a correct tax code and apply the correct income tax deductions.
The BR code is not necessarily wrong, but needs to be checked to make sure you’re not overpaying income tax.
Why have I got a BR code?
HMRC uses a BR tax code for a variety of reasons. Some of the most common include:
1. Being given a BR tax code because your employer does not have enough information to give you the correct code.
This is typically the most common reason for people to be issued with a BR code and can be fixed by giving your new employer your last P45 or by completing a P46;
2. Going from self-employment into PAYE employment.
3. Having an additional income such as a second job or pension.
What does the BR code mean?
All taxpayers get a tax free personal allowance which can change each tax year. This means that you only start paying tax on earnings over the personal allowance.
If you’ve been given a BR tax code all of your salary is taxed at 20% with no tax free personal allowance taken into consideration.
Can I get a BR tax code tax rebate?
If you shouldn’t have a BR tax code it’s important that you get your code corrected as quickly as possible.
Otherwise, you’re likely to be paying too much income tax because you’re not getting the benefit of your tax free allowance.
When your code is changed, any overpayment of tax for that tax year is usually repaid through your salary.
If you’ve had a BR tax code during the last year, or any of the previous four tax years, you could be owed a refund for these years as well.
How do I get my BR code changed?
In many cases all you need to do is give your employer your P45 or a completed P46.
If you have not recently changed employer and you are unsure why you have a BR tax code you should contact HMRC.
You should explain to HMRC that you would like clarification on why you have a BR tax code and if it is wrong they can change it for you.
The process is quite simple and if you paying too much income tax this can be refunded to you after your new tax code has been sent and then used by your employer.
To discuss your BR tax code with HMRC you can either speak to them online or by phone and you can find their contact information for both here.
What does the tax code SBR mean?
The SBR tax code is effectively the same as the BR tax code but is only used for Scottish taxpayers.
What does BRW1 or BRM1 mean?
The presence of a ‘W1’ or ‘M1’ in your BR tax code signifies that your tax is calculated on a non accumulative basis either on a weekly or monthly basis.
Higher rate taxpayer with a BR code?
If you pay tax at the higher rate, you might be underpaying tax if you have a BR code and normally have a D0 tax code.
This is because you should be paying the higher rate of tax on a proportion of your salary, but have only paid the basic rate of tax on the entire sum due to your BR tax code.
There have been cases where this has only been picked up after a few years have elapsed, resulting in a rather hefty amount of money being owed back to HMRC.
If you think this may be the case you should mention this to HMRC as soon as you can to ensure your current tax code is accurate.
