What is a BR Tax Code?

A BR tax code is a specific code used in the UK tax system. It indicates that all your income will be taxed at the basic rate without any personal allowance. This means that your entire salary or pension is subject to the same tax rate, which is currently set at 20%.

The HM Revenue and Customs (HMRC) calculates your tax code based on your income and sends it to you. If you have a BR tax code, it usually means you have more than one job or pension, or that your main source of income is not receiving a personal allowance due to certain circumstances.

When you receive your salary or pension, your employer uses this tax code to determine how much tax to deduct each month. They calculate the tax based on the total amount you earn and apply the basic rate to it. The employer then sends this deducted amount directly to HMRC every month.

Understanding the BR Tax Code

The BR tax code stands for “Basic Rate” and is used in the UK tax system. This code indicates that all your income will be taxed at a flat rate of 20%, without any personal allowance applied. This means that from the first pound you earn, you will pay tax, unlike other tax codes that allow you to earn a certain amount tax-free.

When is the BR Tax Code Used?

You may receive a BR tax code in several situations:

Multiple Income Sources: If you have more than one job or pension, your primary source of income may be your personal allowance, while additional income is taxed at the basic rate under the BR code.
New Employment: Starting a new job without providing your previous employer’s P45 can result in being placed on a BR tax code temporarily. This happens because your new employer does not have your previous earnings information.
Taxable Benefits: If you receive benefits from your employer, such as a company car or medical insurance, these may also be taxed under the BR code if your main income has already used up your personal allowance.

Implications of the BR Tax Code

Being on a BR tax code affects your take-home pay. For example, if you earn £30,000 annually and are taxed under the BR code, you will pay £6,000 in taxes (20% of £30,000), leaving you with £24,000 after tax deductions.It is essential to monitor your payslips for accuracy. If your BR tax code is incorrect, it could lead to overpayment or underpayment of taxes. In such cases, contacting HM Revenue and Customs (HMRC) is crucial to rectify any discrepancies.

Refunds and Adjustments

If you believe you have overpaid taxes due to being on a BR tax code, you can claim a refund from HMRC. This can be done by submitting a tax return or directly requesting a refund from HMRC.

What Does the BR Tax Code Mean?

The BR tax code stands for “Basic Rate” and is used in the UK tax system. It indicates that all your income from a particular job or source will be taxed at the basic rate of 20%, without any personal allowance. This means that every pound you earn is subject to this tax rate, which can significantly affect your take-home pay.

For example, if you have two jobs, your second employer may assign the PAYE tax code BR to prevent underpayment of tax. It simply means you’re being taxed as if you have no allowances left for that income stream.

Why Is the BR Tax Code Applied?

There are several reasons why you might have the Basic Rate Tax Code on your payslip:

Multiple sources of income: If you have more than one job or receive a pension and income, your second source may be taxed at the basic rate.
The employer hasn’t received your tax details: Sometimes, new employers may not have full details from HMRC, leading to temporary use of the BR Taxation Code.
PAYE system delays: Occasional delays in the Pay As You Earn (PAYE) system could result in your tax code being set to BR temporarily.

Impact on Your Earnings

Being on a Basic Rate Income Tax Code means you may be paying too much tax. Here’s an example:

Income Source	BR Tax Applied	Personal Allowance Considered	Effective Tax Rate
Primary Job	No	Yes	Basic rate (20%)
Second Job/Pension	Yes	No	20% on all earnings

In this case, if your second job or pension income is being taxed under the BR tax code, you’re missing out on personal allowance.

How to Check if You’re on a BR Tax Code

To determine if you are on a BR tax code, follow these straightforward steps:

1. Check Your Payslip

Your payslip is the easiest place to find your tax code. Look for the tax code printed near the deductions section. If you see “BR,” this indicates that your income is being taxed at the basic rate of 20% without any personal allowance.

2. Review HMRC Correspondence

You may receive a “Tax Code Notice” letter from HM Revenue and Customs (HMRC). This document outlines your current tax code. If you have not received one recently, it may be helpful to check your emails or letters from HMRC.

3. Use Your Personal Tax Account

You can check your tax code online by logging into your personal tax account on the HMRC website. If you do not have an account, you can create one easily. Once logged in, navigate to the section on tax codes to view your current tax code and any relevant details.

4. Check the HMRC App

If you prefer using mobile applications, download the HMRC app. It allows you to view your tax code and other important financial information directly from your smartphone.

5. Contact HMRC Directly

If you are still unsure about your tax code or believe it may be incorrect, contact HMRC directly. You can call their helpline at 0300 200 3300. Make sure to have your National Insurance number handy when you call.

Understanding Your Tax Code

A BR tax code means that all income from that job or pension is taxed at the basic rate of 20%. This code typically applies when:

You have more than one job, and your personal allowance has already been used as your primary source of income.
You have started a new job without providing a P45, leading to an emergency tax code being assigned temporarily.

If you find that you are on a BR tax code but believe it should be different, take action promptly by contacting HMRC or providing necessary documents to your employer to ensure correct taxation moving forward.

What is the Purpose of a BR Tax Code?

The Basic Rate Coding ensures that you’re at least paying tax at the basic rate, especially when employers or HMRC are unsure of your full tax details. It’s often a stop-gap measure to prevent underpayment of taxes, which could lead to future liabilities. However, it’s a temporary solution that usually requires correction to avoid overpayment.

Why You May Have a BR Tax Code

Several scenarios can lead to a Basic Rate Tax Code being applied:

You’ve started a second job without updating your tax information.
You’re receiving a BR tax code on pension.
You’ve recently changed jobs, and HMRC hasn’t yet updated your new employer with your tax code details.

Example of PAYE on Tax Code BR

Let’s consider an example to better understand how PAYE operates under a BR Income Tax Code:

Annual Income	Tax Code	Tax Paid at 20%	Personal Allowance Used?
£25,000	BR	£5,000	No
£25,000	1257L	£2,500	Yes

In the case of the BR tax code, all of your income is taxed at 20%, leading to a higher tax deduction.

Is BR an Emergency Tax Code?

The BR tax code is not technically classified as an emergency tax code, but it can be assigned in situations that resemble emergency tax scenarios. The BR code stands for “Basic Rate” and indicates that all income from that job or source will be taxed at the basic rate of 20%, without any personal allowance applied.

The tax code BR M1 is used as an emergency tax code, meaning it applies no personal allowance and taxes all income at the basic rate. This code is often temporary and should prompt you to contact HMRC for a review. It ensures that you are not underpaying taxes while your situation is clarified.

How to Change My BR Tax Code

If you’re incorrectly taxed under the BR Code, here’s how to change it:

Notify HMRC: Provide details about your income and personal allowances.
Update your employer: Ensure they have your correct tax information.
Check regularly: Monitor your payslips and HMRC account for updates.

Will My BR Tax Code Change Automatically? Your Basic Rate Tax may change automatically, but it depends on updates from HMRC regarding your tax situation. If your income or employment status changes, HMRC should adjust your code accordingly. However, it’s wise to monitor your payslip to ensure you are on the correct code.

Could I Be Due a Tax Rebate?

If you’ve overpaid tax due to being on the Tax Code BR, you could be eligible for a tax rebate. HMRC will usually correct overpayments automatically, but you can also file a claim. This typically happens when:

You leave a job.
Your tax code is updated after you’ve been overtaxed.

How Much Tax Will You Pay on a BR Tax Code?

Under the Tax System Code, you’ll pay 20% on all income with no personal allowance considered. For instance, if you earn £30,000, your total tax will be £6,000.

Is a BR Tax Code Always Wrong?

Not always. If you have multiple sources of income or don’t qualify for a personal allowance on a particular job or pension, the BR Code may apply correctly. How do I correct my BR tax code? To correct your Tax Code BR, first, contact HMRC directly or use your online account to provide updated information about your income and allowances. You may also need to inform your employer of the changes. This process ensures that you pay the correct amount of tax moving forward.

HMRC Tax Codes Explained

When dealing with your taxes, it’s crucial to understand how BR codes are managed by HMRC. HMRC assigns this code when they lack complete information about your income or allowances. Regularly checking your BR tax code HMRC online account can help ensure you are taxed correctly.

Aside from the Basic Rate Code, there are several other tax codes HMRC uses to calculate your tax, such as:

1257L: The standard code, giving you a personal allowance.
M1/W1: Emergency codes, which don’t account for previous earnings.

If you’ve been overtaxed while on the tax code BR, you may be eligible for a BR tax code refund. HMRC automatically reviews your tax situation at the end of the tax year. If you have paid too much tax, they will issue a refund, which can be a welcome surprise.

Conclusion

The BR tax code in the UK is often applied to ensure taxpayers don’t underpay. However, it can result in overpayment if left unchecked. To ensure you’re paying the right amount of tax, regularly check your tax code, update your employer, and contact HMRC if needed. If you’ve overpaid, you may be entitled to a refund. Understanding the BR tax code can help avoid tax errors and ensure your income is taxed accurately.

About the Author: Ahmad Raza

Ahmad Raza, is a devoted entrepreneur with an unrivalled love for UK taxation, and he amassed a large and diverse clientele over the course of his career. He's not just interested in numbers; He also believe in the value of human connection through his writing's. He had a pleasure of working with a variety of business organizations, and been a trusted advisor to 7-figure sellers in the e-commerce market, with a unique specialty in Tax Consultancy. It gives him enormous delight to translate the complex world of tax calculations into easy, practical insights for clients at Xact+.

What is a BR Tax Code? What They Means – Explained