What Is A BR Tax Code In The UK? A Guide For Employees
In the UK, tax codes are essential identifiers used by employers and HMRC to determine how much income tax should be deducted from an employee’s earnings. Generally, these tax codes are a combination of numbers and letters and are included on an employee’s payslip. The objective of these tax codes is to ensure that the employee pays the correct amount of tax based on their personal allowance and other circumstances. However, in some scenarios, special tax codes like the BR tax code are used. Therefore, this guide answers what is a BR tax code, when it is applied to the employee’s income, and how it affects their take-home pay.
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What Is A BR Tax Code?
The BR tax code stands for Basic Rate. It means that all your earnings from a specific job or income source are taxed at the basic income tax rate, which is 20% for the 2025/26 tax year. Notably, if you have been given a BR tax code, you do not receive the standard tax-free Personal Allowance, which is £12,570 for the current tax year. It mainly implies that you have more than one job, and your Personal Allowance is being applied to the other one. Consequently, you will remain bereft of the personal allowance, and every penny you earn from that job or income source will be taxed at 20%.
Let’s understand it with an example. When juggling two jobs, your tax-free Personal Allowance is usually only applied to one of them. For instance, your main job gets a tax code of 1257L, meaning the first £12,570 of the income you earn through it is tax-free. Now, your second job will be assigned a BR tax code. Consequently, the entire income you earn from it is taxed at the basic rate of 20%.
For greater clarity, personal allowance is an untaxed income threshold, meaning no tax is charged on income up to this figure, which is set at £12,570 for 2025/26. The following table shows the current tax rates and bands established by HMRC:
| Tax Band | Tax Rate (%) | Taxable Income |
| Personal Allowance | 0 | Up to £12,570 |
| Basic Rate | 20 | £12,571 to £50,270 |
| Higher Rate | 40 | £50,271 to £125,140 |
| Additional Rate | 45 | over £125,140 |
It is a good practice to stay abreast of changing tax rates. Hence, keep visiting the government website to stay updated.
When Is The BR Tax Code Applied?
Understanding the scenarios under which the BR tax code is applied is essential when learning what is a BR tax code. Generally, HMRC might assign you the BR tax code in the following circumstances:
Second Jobs:
If you have more than one job or a pension apart from your main or primary job, it means you have multiple sources of income. In such cases, the BR code is primarily applied to your second source of income. How so? With more than one job or pension, your main job’s income will enable you to claim your personal allowance. On the contrary, the additional income from other sources will be taxed at the basic rate under the BR code.
New Job:
Consider a scenario where you have started a new job and your employer has not yet received your correct tax details, such as your P45 form. As an outcome, your new employer can temporarily place you on a BR tax code since your new employer does not have your previous earnings information.
Emergency Tax Situations:
In some cases, the BR tax code is used as an emergency measure until HMRC updates your records.
Taxable Benefits:
If you receive perks from your employer, like a company car or medical insurance, they may be taxed under the BR code if your main income has already depleted your personal allowance.
If you are keen on knowing more about the P45 form, read our guide:
How Does A BR Code Affect Your Pay?
Evaluating the tax implications of the BR code is undeniably crucial when going through the ins and outs of what is a BR tax code. Generally, the BR code leads to overpayment of tax rather than underpayment. To clarify, as it assumes no personal allowance, more tax may be deducted than necessary. In contrast, if you have multiple jobs and your personal allowance is already used elsewhere, the BR code accurately displays your liability on the second income.
For example, consider you earn £40,000 annually from a second job. Taxed under the BR code, you would have to pay 20% tax on the entire £40,000, which amounts to £8,000 in tax. Subsequently, you will be left with the remaining £32,000. Now, compare this to the standard tax coding, e.g., 1257L, where the first £12,570 would be tax-free, and only the remaining income would be taxed. Thus, it highlights that you could be missing out on the benefit of your personal allowance if it has not already been used against another income source.
In a nutshell, it is essential to understand how your total income across all sources is being taxed to avoid both underpayment and overpayment. Furthermore, it is also advised that you evaluate your payslips to ensure they are correct. If you discover the BR tax code is incorrect, you must contact HMRC to rectify or correct any discrepancies.
Like the BR tax code, there is another emergency tax code called M1. It is applied by HMRC when it lacks sufficient information to issue the correct tax code for calculating an individual’s tax liability accurately. To delve into the M1 tax code, read our following guide:
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Conclusion:
Understanding what is a BR tax code is imperative for UK employees, especially those with multiple income sources or starting a new job. Although the prime purpose of a BR tax code is to ensure that the correct tax is collected, it can also lead to overpayment if the employee does not adjust it in time. Therefore, it is strongly recommended that you regularly review your tax code and communicate with HMRC and your employer in order to avoid unnecessary deductions.
Moreover, it is equally essential for businesses to stay compliant with tax code management to avoid the occurrence of payroll errors. To help you ensure your payroll processing is accurate and timely, the certified payroll accountants at Payrollservices.accountants can help ensure tax codes like BR are correctly applied and adjusted. Beyond that, our accountants are well-versed in handling emergency code situations and offering efficient and affordable payroll compliance.
Disclaimer: The content contained in this blog is exclusively aimed at informational purposes and should be treated as such. While it has been written with thorough scrutiny at the time of writing to ensure every information is correct, no warranty for the acceptance of any error or inaccuracy is given. It is not a piece of absolute financial advice, nor is it expert legal advice. Hence, it is advised to consult a professional before acting upon any information stated herein.