From time to time you may be put on an emergency tax code.  Your employer or pension provider will do this when they don’t know enough about your tax or income details for the current tax year.  HM Revenue and Customs (HMRC) will work out what your correct tax code for the year should be and then you will receive your correct tax code.

Our guide looks at three things you should know about emergency tax codes.

What an emergency tax code is

You will receive an emergency tax code when your employer or pension provider doesn’t have enough information about your income to give you the correct tax code.  It is used on a special basis until HMRC has worked out what your correct tax code should be.

An emergency tax code normally makes sure that you get the basic Personal Allowance (and therefore some tax-free pay) but doesn’t take into account any other tax allowances or reliefs that you may be entitled to.

Once HMRC has the correct details of your previous income and tax paid for the tax year, they will send your employer (and you) your correct tax code. Your employer will deduct the correct tax in future and refund any overpaid tax.

When you might be put on an emergency tax code

You might be put on an emergency tax code if:

• You have started a new employed job and you were previously self employed
• You have started a new job and you don’t have your P45 from your last job
• You have started a new job but you have had another job/jobs or received taxable state benefits during the year
• You have started receiving company benefits or the State Pension and your tax code has changed

What the emergency tax code is in 2011/12

The emergency tax code is set each tax year and is a number followed by the letter L. The number is the basic Personal Allowance (£7,475 for the tax year 2011-12) divided by ten. The emergency code for 2011-12 is therefore 747L.

You may also see’747L W1′ or ’747L M1′ (meaning ‘Week 1′ or ‘Month 1′ – whereby you get a proportion of the Personal Allowance over the remainder of the tax year – depending how your emergency tax code is worked out.

You might be put on a ‘week 1′ or ‘month 1′ emergency tax code if:

• Your tax code has been reduced by a large amount
• You have given your new employer a P45 Part 3 showing a previously used week or month 1 emergency tax code
• You have had another job or taxable state benefits during the year

Week 1 or month 1 emergency codes treat each week or month on its own and give you an equal amount of tax-free pay every payday.  However, your tax may not be correct at the end of the year as they cannot take into account any changes in your income or tax that happened earlier in the year.