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 and HMRC has all of the necessary details to give you a new tax code which ensures you pay the right amount of income tax.
In some cases individuals can be owed a BR refund which can only be repaid after your tax code has been changed.
The BR code is not necessarily wrong, but should be checked to make sure you’re not overpaying income tax.
There are circumstances where the BR tax code should be used because if it isn’t you will not pay all of the tax you owe.
Our BR tax code guide explains why you may be given a BR code, how to check it and reclaim a BR tax code refund from HMRC if you have paid too much 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 an HMRC starter checklist.
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 refund?
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 BR tax code refund 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 BR refund for these years as well.
A backdated BR tax code refund is repaid directly by HMRC either by cheque or bank transfer.
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 starter checklist.
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 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.
What does BR Cumul tax code mean?
The BR cumul (cumulative) tax code takes into account previous pay periods’ earnings and tax deductions when calculating the tax for each pay period.
A cumulative tax code considers the overall income and tax payments from the beginning of the tax year in an attempt to keep tax deductions accurate throughout the tax year.
What does BR NonCum mean?
The BR NonCum tax code applies a flat rate of 20% to each individual pay period, without taking into account previous periods’ earnings or taxes paid.
A BR non cumulative code is generally used to manage secondary sources of income.
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 CBR tax code mean?
HMRC uses the letter C in a tax code to show that you are liable to pay tax in Wales. The letter C is used at the start of all tax codes given to individuals with Welsh taxpayer status.
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.
