The BR tax code is said to be one of the most commonly applied tax codes in the UK. We will explain the meaning and application of the BR tax code in the following article, along with the usage and application of the term “non-cumulative” when it is used with tax codes, as well as some important terms and calculations related to income tax.

What Is The Meaning Of A BR Noncum Tax Code?

A BR Noncum tax code indicates that the entire amount of your income must be taxed at the basic rate of 20 per cent without taking into consideration your tax-free Personal Allowance of £12,750. 

It is usually applied when the HMRC and your employer do not have complete details regarding your employment and/or income details and the BR tax code is assigned to you while the documentation is complete and a permanent tax code can be assigned to you.

In addition to this, you can be assigned a BR tax code if:

  • an individual has not provided their employer with a complete P45 form or a P46
  • someone is being transferred from being self-employed to a PAYE employee
  • you are receiving an additional income through a second job or a pension

A non-cumulative tax code is one that only takes into account the period in question for your tax calculation and deduction. This means that depending on whether you receive your pay on a weekly or monthly basis, a non-cumulative tax code will apply for that specific period only and it may change the next time you receive a payslip. 

This means that the income tax rate is applied to the entire sum of income(s) of an individual without the deduction of Personal Allowance from their earnings. In case an individual has paid a sum of income tax before a non-cumulative tax code is applied to their income, the amount cannot be adjusted. Therefore, there are chances that taxpayers will end up overpaying their taxes when a non-cumulative tax code is assigned to them in the middle of a tax term.

If you have been assigned a BR Noncum you are a higher rate taxpayer who earns more than  £50,270, you will be underpaying your taxes under this code. You should be assigned the D0 or D1 tax code to apply a 40 per cent deduction of income tax.

If you have been assigned an incorrect tax code, you can ask your employer or HMRC directly to make amendments. For this purpose, you will have to fill out either a P45 or a P46 form and share relevant details of all sources of income.

Is There Any Other Basic Rate Tax Code?

Yes, there is another basic rate tax code. If your tax code is 0T1, it means that you have no tax free personal allowance and a basic rate of income tax will be applied to the total amount of your income.

There are many reasons why an 0T1 tax code is assigned to individuals. One of the reasons may be that you have no tax free allowance remaining which may be exempted from income tax. Another reason could be that you’ve recently started a new job. Due to this, you have not been able to give your employer your old P45 and you haven’t submitted your P46 as yet. 

This means that taxpayers living in England will be charged as follows:

  • 20% tax on income up to £37,500
  • 40% tax on income between £37,501 and £150,000 
  • 45% tax on income above £150,000

What Is The D0 Tax Code?

The D0 tax code indicates that the individual will be liable to pay income tax at a higher rate of 40 per cent for all their incomes. It is commonly used in cases where individuals have more than one job or pension. The HMRC issues this tax code to individuals if all of their tax-free allowances have been used against another source of income. 

Individuals are assigned a D0 tax code because (a) they have multiple sources of income and (b) calculations predict that their second source of income will cause their total combined gross earnings to be between £37,701 and £150,000. This is only after any tax-free allowance has been deducted.

What Is The Difference Between A Cumulative Tax Code And A Non-Cumulative One?

Most taxpayers in the UK are assigned a cumulative tax code. This is a regular tax code without any extension at the end. When tax deductions are calculated in the case of cumulative tax codes, the annual income of individuals is accounted for. Additionally, any income tax that they may have paid is deducted from the next amount that is due to taxpayers; along with a deduction of their Personal Allowance. 

For instance, 1257L which is currently the most common 2021-22 tax code in the UK is a cumulative tax code. It refers to the new Personal Allowance rate for 2021-22, which is £12,570 and the letter “L” indicates that the individual is entitled to this amount of tax-free income. Any taxes that are to be charged will be above additional amounts beyond this figure.

Meanwhile, the 1250LX tax code is a noncumulative emergency tax code. This means that it is temporary and can be changed with a change in an individual’s circumstances. Other emergency tax codes include those ending with an M or a W.

How Much Income Tax Do I Have To Pay?

Incomes above the minimum cap are taxed at an incremental rate of 20 per cent to 45 per cent depending on whether an individual belongs to the basic, higher or additional tax rate band. Below are details of these bands:

  • 0 per cent income tax when income is up to £12,570
  • 20 per cent income tax when income is between £12,571 and £50,270 
  • 40 per cent income tax when income is between £50,271 and £150,000 
  • 45 per cent income tax when income is above £150,001

Do I Have To Pay Tax On Income From A Second Job?

Yes, if you have a second job, your income from this source of earnings will also be taxed. However, the tax that you pay on a second job will depend on a number of factors. 

Generally speaking, your second job is usually assigned a BR (Basic Rate) tax code which indicates that there is a 20 per cent tax due on your income.  

To avoid being overtaxed or undertaxed (with tax arrears due at the end of the term) due to a second job, it is advisable to follow the below instructions: 

  • When you start a second job you must make sure that you get a Starter For or P46 from your new employer. This form is used to update your employment details at the HMRC.
  • Confirm the tax codes assigned to both of your jobs. Your main job is usually assigned a 125L tax code for 2021-2022; while your second job will be assigned a BR, D0 or D1 tax code.

If your second job involves you in a self-employed position, you will have to pay your own tax and National Insurance contributions by filing a self-assessment tax return on the 31st of January every year. 

What Is Personal Allowance?

When you are working in the UK, there is a certain amount of your income that remains tax-free as it is considered to be a Personal Allowance. The amount set for Personal Allowance during the 2021-2022 tax period is £12,750. 

Your personal allowance is applicable on your combined incomes from different sources. However, for the purpose of tax deduction, your main or primary job, which is also the source of a higher income is considered for Personal Allowance deduction prior to a tax rate is applied.

Since you get Personal Allowance once (it does not apply to each individual source of income), it may be in your own interest to have it applied to your main job and not the second one. However, if someone works two jobs and their cumulative income is less than the Personal Allowance amount of £12,750, they can have it spilt across both incomes. Sometimes a second job may increase your tax bracket which leads to a higher tax deduction on your income with an insignificant impact on your take-home salary.

Your second job is usually considered to be the one that provides a lower income than the first one and there is no consideration for Personal Allowance since it has already been accounted for. The reason is that the HMRC divides your total income by sources to calculate the amount of tax that is due on your cumulative income.

Conclusion:

The BR Noncum tax code applies the basic rate deduction of 20 per cent on the entire gross salary of the recipient, without deduction of a tax-free personal allowance. The reason for this is its noncumulative nature which only takes into account a specific period and not the entire tax term as long as it is applied.

FAQs: What Is The Meaning Of A BR Noncum Tax Code?

Why am I on a non-cumulative tax code?

You may be on a nun-cumulative tax code if you have started a new job or have shifted from self-employed status to a PAYE one. Due to this, only your current wages will be accounted for by the tax code without consideration of your previous earnings or the amount of tax paid.

What does code BR mean tax?

The BR tax code means that your gross salary will be taxed at 20 per cent; without deducting the personal allowance amount of £12,750. This is an emergency tax code that is applied on a temporary basis.

Is BR an emergency tax code?

Yes, BR is an emergency tax code that is applied in case an individual has not provided their employer with a complete P45 form or a P46, someone is being transferred from being self-employed to a PAYE employee or they are receiving an additional income through a second job or a pension.

Do you pay NI on a second job?

Yes, you pay NI on a second job in the same way as income tax. National Insurance applies on earnings above £184 a week in the 2021-22 tax year. If you earn more than this in both of your jobs, National Insurance contributions will be due on both jobs.

Do I get the emergency tax back?

Yes, if you have overpaid taxes due to an emergency tax code in the current year, the excess amount will be refunded. In case of overpayment in previous years, you will have to apply to the HMRC using a tax rebate form.

References:

What Is Tax code BR?

What does BR NONCUM in my tax code box mean on my wage slip

What The Tax Code BR Non Cum Is All About

HMRC overtaxing due to 2 jobs -Tax Forum:: Free Tax Advice

What Is A BR Tax Code? | BR Emergency Code.

Tax Code BR – Patterson Hall Chartered Accountants

BR, BR-W1 and BR-M1 – Key Portfolio

How much tax do you pay on a second job? – The PAYE People

0T, 0T-W1 and 0T-M1 – Key Portfolio

Cumulative and Non-Cumulative Tax Basis – PayFit

How much tax do you pay on a second job? – The PAYE People

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John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.