A wrong HMRC tax code usually shows up as a sudden change in take-home pay. In UK workplaces it often happens after starting a new job, returning from a break, getting a pay rise, switching from weekly to monthly pay, or taking on a second job. Payslips may show an unfamiliar code (for example 0T, BR, D0, D1, K codes, or an emergency code ending W1/M1), and the tax line can jump even when gross pay is similar.
Common household patterns include: one partner’s pay dropping while the other stays the same; a refund appearing and then being clawed back later; or a new employer taxing everything at basic rate. People also notice it when a P60 total looks off at year end, or when a PAYE “tax calculation” letter arrives saying too much or too little tax was paid.
In many UK cases the code is not “random” — it is HMRC trying to estimate allowances and collect tax due, based on information received from employers, pension providers, or benefits systems. The problem is that the estimate can be wrong, out of date, or applied to the wrong job.
Likely causes in practice
Start a new job
The most common trigger is a new employer not receiving the correct starter details. If a P45 is missing, late, or incomplete, payroll may use an emergency code until HMRC updates the record. This is especially common when onboarding is rushed, the P45 is from a previous tax year, or the starter checklist is filled in with the wrong statement.
Add a second income
Taking a second job or starting a pension alongside wages often leads to a BR/D0/D1 code on one income. That can be correct, but it is frequently applied to the wrong job (for example, the higher-paying job gets the BR code). This is a typical cause of a noticeable drop in net pay.
Benefits and deductions change
Company benefits (medical cover, car benefit, fuel benefit) and deductions (salary sacrifice, cycle scheme, workplace nursery) can change the tax code. Problems arise when the benefit value is estimated incorrectly, a benefit ends but stays on the record, or a new benefit is added twice.
Old job still “live”
HMRC records sometimes show an old employment as still active, particularly after short-term work, agency work, or overlapping pay dates. That can split allowances across jobs or remove allowances from the current job, producing a lower tax code than expected.
Underpayment recovery
HMRC can adjust a tax code to collect an earlier underpayment through PAYE. This often surprises people because the underpayment relates to a previous year, a job change, or a period on benefits. The code may include a reduction in allowances to recover the amount over the year.
Incorrect personal details
Name changes, wrong National Insurance number, or duplicated records can cause mismatches. In real UK cases this shows up as HMRC letters not matching the current employer, or two employments appearing similar on the Personal Tax Account.
Checks that usually clarify it
Read the payslip code
Note the exact tax code and whether it has W1/M1 (week 1/month 1) next to it. W1/M1 usually means “non-cumulative” and can cause over- or under-tax until corrected. Also note whether the code is marked as “emergency” on the payslip.
Compare with last payslip
Look at the previous payslip (or the last one from the old job) and compare: tax code, taxable pay to date, and tax paid to date. A sudden reset of “to date” figures often indicates a new payroll record or W1/M1 treatment.
Check the P45 or starter form
If there was a job change, confirm whether a P45 was given to the new employer and which tax code it showed. If no P45 was provided, check what statement was selected on the starter checklist. A wrong statement can push payroll into emergency coding.
Review HMRC online record
Use the Personal Tax Account to check employments listed, estimated income for each job, and any benefits shown. The most useful detail is whether HMRC has allocated the personal allowance to the correct job and whether an old job is still marked as current.
Confirm benefit values
If there is a company car or medical benefit, check the P11D value (or the employer’s benefits portal) and whether the benefit has ended. A benefit that ended months ago but still appears on HMRC’s record is a frequent reason for a reduced code.
Step-by-step fixes
Gather key details
Have these ready: National Insurance number, employer PAYE reference (from payslip), start date, payroll number, current tax code, and year-to-date taxable pay and tax paid. If there are two jobs or a pension, collect the same details for each income.
Correct employer records
If the issue started with a new job, ask payroll whether the P45 was processed and whether the starter checklist statement was entered correctly. Payroll can often fix obvious data issues (wrong NI number, wrong start date, duplicate record) and re-send the correct information to HMRC on the next Full Payment Submission.
Update HMRC allocation
If allowances are on the wrong job, HMRC usually needs to reallocate the personal allowance. The practical request is: “Allocate the personal allowance to the main job and apply BR (or appropriate) to the second income,” or the reverse if the second income is higher. Once updated, HMRC issues a new code to the employer electronically; it can take a few payroll runs to feed through depending on cut-off dates.
Remove ended benefits
Where a benefit has ended, ask the employer to confirm the end date and whether it was reported as ceased. Then ask HMRC to remove it from the coding notice. In typical cases, providing the end date and the employer name is enough; sometimes HMRC asks for confirmation in writing from the employer.
Deal with underpayment recovery
If the code is collecting an underpayment, check the amount and the year it relates to. If the recovery is causing hardship, HMRC can sometimes spread it over a longer period or discuss alternative arrangements. The key is to confirm the underpayment is correct before agreeing to collection through the code.
Ask for a cumulative code
If W1/M1 is causing repeated over-tax, request a cumulative code where appropriate. This often corrects itself once HMRC has the right pay and tax figures, but it can be faster to prompt HMRC once the correct employment details are on record.
Check the next payslip
After any change, check the next payslip for: new tax code, whether W1/M1 has been removed, and whether the “to date” figures look sensible. If the code changes but take-home pay still looks wrong, the year-to-date taxable pay may be incorrect (for example, if payroll created a new record mid-year). That is usually an employer payroll correction rather than an HMRC coding issue.
If it’s ignored
A wrong tax code often self-corrects eventually, but the usual outcome is a larger adjustment later. Over-tax can mean waiting until HMRC issues a refund (sometimes after the tax year ends). Under-tax can build up quietly and then be recovered through a future code change, a P800 calculation, or a direct payment request.
In households budgeting month to month, the biggest practical risk is cashflow: net pay stays lower for several pay periods, or a surprise underpayment recovery reduces pay without warning. Another common knock-on is confusion when applying for a mortgage or tenancy, because payslips and P60 figures don’t match expectations and need explaining.
When to escalate
Spot warning signs
Escalation is sensible when: the code is a K code and net pay drops sharply; the code changes repeatedly across months; HMRC shows an employer that is not recognised; or there is a large underpayment being collected without a clear explanation.
Prepare useful evidence
HMRC and payroll teams respond faster when the facts are clear. Useful evidence includes: the last three payslips, the P45 (if applicable), any coding notice letter/email, and a screenshot or note of what the Personal Tax Account shows for employments and estimated income. If a benefit is involved, keep the benefit start/end date and any employer confirmation.
Use the right channels
Employer payroll can fix payroll record errors and resubmit pay/tax data; HMRC can change the tax code and employment status on the PAYE record. If there is a wider billing or household admin issue happening at the same time (for example after a move), it can help to keep a single timeline of dates and reference numbers. For related admin problems after moving home, the pattern is similar: wrong records create wrong charges, then corrections take time to filter through. A comparable example is Council tax bill wrong after moving, where the fix is also evidence-led and date-driven.
FAQ
Why has the tax code changed…
Most often it’s a new job, a second income, a benefit value being added, or HMRC adjusting the code to collect an earlier underpayment.
Does an emergency tax code mean…
Often yes, especially with W1/M1, but not always. It depends on pay pattern and whether allowances are being applied elsewhere.
Can an employer change the tax…
Payroll applies the code HMRC issues, but can correct starter details, NI number errors, and payroll record problems that cause the wrong code to be used.
How long does a corrected code…
HMRC can issue a new code quickly, but it may not appear until the next payroll run, depending on cut-off dates and how often payroll updates are processed.
Will overpaid tax be refunded automatically?
Sometimes it is corrected through PAYE once the code is right; otherwise HMRC may issue a refund after a tax calculation, often after the tax year ends.
What if there are two jobs?
Usually one job gets the personal allowance and the other is taxed at a flat rate (often BR). Problems arise when HMRC allocates the allowance to the wrong job.
Before you move on
Write down the exact tax code (including any W1/M1), the employer PAYE reference, and the year-to-date tax and taxable pay from the latest payslip, then check whether HMRC has the right job marked as the main employment and the right benefits listed. If you felt pushed to accept a quick explanation or told it would “sort itself out” without checks, that’s often a sign the process was handled too casually.
Get help with the next step
If the code still looks wrong after the checks above, send the key details and a clear timeline for a second look via https://ukfixguide.com/contact/.
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