BRX Tax Code | An Essential Guide for Businesses and Individuals

Navigating the complexities of UK taxation can be daunting, especially when faced with unfamiliar tax codes like BRX. Whether you’re an individual balancing multiple incomes or a business managing payroll, understanding the BRX tax code is crucial to ensuring compliance and avoiding potential errors.

This guide aims to demystify the BRX tax code, explaining its implications for taxpayers and providing practical advice on addressing related concerns. Let’s dive in to better understand how this tax code works and what it means for you.

What is the BRX Tax Code?

The BRX tax code is a code used by HM Revenue & Customs (HMRC) to deduct tax from an individual’s income at the basic rate of 20%, without applying a personal allowance. This means every pound earned under this code is taxed from the first pound.

The BRX tax code is commonly used in the following situations:

• Secondary Jobs: When you have more than one job, your primary job typically utilises your personal allowance, and the BRX code applies to the second job.
• Pensions: If you receive income from a secondary pension source, the BRX tax code may apply.
• Emergency Taxation: In cases where HMRC does not have complete information about your earnings or personal circumstances, the BRX code may be applied temporarily.

Example: Suppose your main job pays £30,000 annually, and you also have a part-time job earning £10,000. Your primary income uses your personal allowance of £12,570, meaning the remaining income is taxed accordingly. For your second job, the BRX tax code ensures that the entire £10,000 is taxed at 20%, preventing overlap in personal allowance usage.

Why is the BRX Tax Code Assigned?

The BRX tax code is applied in specific circumstances to simplify tax calculations and ensure that your personal allowance is only used once. Below are the common reasons for its assignment:

1. Second Income Sources: If you have a second source of income, such as a second job or pension, HMRC uses the BRX tax code to ensure that your personal allowance is only applied to your primary income.
2. Emergency Tax Code Situations: When HMRC doesn’t have up-to-date information about your income, such as when you start a new job or switch employment, the BRX tax code may be applied temporarily.
3. Ensuring Proper Tax Allocation: By taxing the secondary income at the basic rate, the BRX code prevents individuals from underpaying tax due to misallocation of allowances.

Note: Once HMRC gathers all relevant information about your total income, they may issue a revised tax code to reflect your actual tax situation.

How to Get the BRX Tax Code?

The BRX tax code is not something you apply for directly; it is assigned automatically by HM Revenue & Customs (HMRC) based on your income circumstances. Here’s a step-by-step guide to understanding how to get the BRX tax code and ensure it’s correctly applied to your earnings:

1.  Understand When BRX Tax Code Applies

HMRC assigns the BRX tax code in specific situations. You might receive this code if:

• You have more than one job or income source, such as a pension and a part-time job.
• HMRC has determined that your personal allowance is already allocated to your primary income source.
• You have not provided a P45 or relevant details when starting a second job or pension, leading to temporary assignment of the BRX code.

If you believe you should be assigned the BRX code, ensure your income circumstances align with these criteria.

2. Starting a Second Job or Receiving a Pension

When starting a second job or pension, the employer or pension provider will usually ask you to fill out a Starter Checklist or request a copy of your P45 from your previous employer.

• On the starter checklist, you’ll specify that this is your secondary income source, which alerts HMRC to apply the correct tax code (such as BRX).
• If you do not provide complete information, an emergency tax code might be applied instead, requiring adjustments later.

3. Verify Your Tax Code

If you believe the BRX tax code should apply to your secondary income:

• Check your payslips: The assigned tax code will appear on your monthly or weekly payslips.
• Login to your Personal Tax Account: Use the HMRC online portal to view your current tax code and its allocation across your income sources.

4. Contact HMRC for Assistance

If you do not see the BRX tax code applied but believe it should be, you can contact HMRC directly to request a review of your tax situation. Have the following information ready:

• Your National Insurance Number.
• Details of all your income sources (primary and secondary jobs or pensions).
• Information about any allowances or tax relief you are claiming.

You can contact HMRC via:

• Phone: Call the HMRC helpline for income tax (0300 200 3300 in the UK).
• Online: Use the “Ask HMRC online” tool to send a query.

5. How BRX is Assigned by Employers or Pension Providers?

Your employer or pension provider uses the information from HMRC to assign your tax code. Once HMRC processes your income details:

• They will send a tax code notification (P6) to your employer/pension provider.
• Your employer updates their payroll system with the BRX tax code for your secondary income.

It’s essential to keep your personal details updated with HMRC to ensure tax codes are allocated correctly.

6. What to Do if BRX is Not Applied Correctly

If your tax code is incorrect, you may end up overpaying or underpaying taxes. Here’s how to resolve it:

• Notify HMRC: Explain the issue and provide updated income details.
• Request a Tax Code Change: If the BRX code hasn’t been assigned but is appropriate, HMRC will issue a new tax code to your employer or pension provider.
• Check for Overpayment: If incorrect taxation has occurred, HMRC will process a refund for overpaid taxes.

What Are Your Responsibilities When on the BRX Tax Code?

Being on the BRX tax code comes with certain responsibilities to ensure your tax affairs are accurate and up-to-date. While HMRC and your employer handle much of the tax calculation, there are steps you must take to avoid underpayment or overpayment of taxes. Here’s what you need to know:

1. Understanding Your Tax Code

One of your primary responsibilities is to ensure that the BRX tax code applied to your income is accurate.

• Check your payslips regularly: Verify that the BRX tax code is applied to the correct income source (e.g., your second job or pension).
• Use HMRC’s online tools: Log into your Personal Tax Account to review your tax code and its allocation across income sources.

If you notice any discrepancies, you must contact HMRC immediately.

2. Keep HMRC Informed About Your Income

HMRC assigns tax codes based on the income information they have. To ensure accuracy:

• Notify HMRC of multiple income sources: If you take on a second job or start receiving pension income, let HMRC know promptly.
• Update changes to income levels: If your salary or pension changes significantly, inform HMRC to adjust your tax code accordingly.

Example: If you’re on the BRX tax code for a second job and your total annual earnings exceed the basic rate tax threshold (£50,270 for 2023/24 in England, Wales, and Northern Ireland), HMRC might need to adjust your tax code to reflect higher-rate taxation.

3. Monitor for Overpayments or Underpayments

Since the BRX tax code does not account for a personal allowance, you may overpay tax if the code is applied incorrectly. Conversely, underpayments can occur if your income situation changes, and HMRC is not informed.

• Review your annual tax summary: After the end of the tax year, check your P60 or P45 forms to ensure all taxes were calculated correctly.
• Claim refunds if necessary: If you’ve overpaid taxes under the BRX tax code, you can claim a refund by contacting HMRC or filing a self-assessment tax return.

4. Inform Employers or Pension Providers

While HMRC assigns the BRX tax code, your employer or pension provider implements it in their payroll system. It’s your responsibility to ensure they have:

• Your accurate tax details: Provide the correct National Insurance number and other tax information.
• Updated information about income sources: Let them know if your tax situation changes, such as starting or stopping another job or pension.

5. File a Self-Assessment Tax Return if Required

In some cases, individuals on the BRX tax code may need to file a self-assessment tax return, especially if they:

• Earn income from additional sources, such as freelance work.
• Exceed the higher-rate tax threshold.

Filing a return ensures that any overpayments or underpayments are reconciled, and you meet all your tax obligations.

6. Understand the Implications of the BRX Tax Code

Being on the BRX tax code means that:

• All income under this code is taxed at 20%. You do not receive a personal allowance for the income covered by the BRX tax code.
• It applies only to secondary income sources: Your primary job or pension typically uses your personal allowance.

How Does the BRX Tax Code Impact Your Income?

The BRX tax code has a direct impact on your take-home pay and how your income is taxed. Here’s a detailed breakdown:

1. No Personal Allowance: Unlike other tax codes that allow a personal allowance of £12,570 (2023/24 tax year) before taxation begins, the BRX tax code applies the basic rate of 20% from the first pound earned.
2. Taxation of Secondary Income: If you earn income from multiple sources, the BRX tax code ensures that your secondary income is taxed appropriately. This prevents scenarios where personal allowances are applied to multiple incomes, potentially resulting in underpayment of taxes.

Example Calculation:

• Primary Job Income: £35,000
• Secondary Job Income: £8,000 (BRX Tax Code applied)
  • Tax on Secondary Income: £8,000 × 20% = £1,600

Under the BRX code, the secondary income is taxed entirely at 20%, ensuring compliance with UK tax laws.

What Are the Differences Between BRX and Other Tax Codes?

BRX vs BR Tax Code

The BRX and BR tax codes are often confused, as both tax all income at the basic rate of 20% without applying a personal allowance. However, they differ in their usage:

• BR Tax Code: Used primarily for second jobs.
• BRX Tax Code: Applied more commonly to secondary pensions or similar sources.

BRX vs Emergency Tax Codes (e.g., 0T)

Unlike the BRX tax code, emergency tax codes like 0T or D0 can include higher tax rates based on your income bracket. These are temporary and are typically corrected once HMRC receives updated information about your earnings.

How Can You Resolve Issues with the BRX Tax Code?

1. Review Payslips: Your payslip should clearly indicate the tax code used for deductions.
2. Verify Income Sources: Cross-check with HMRC to ensure that the BRX tax code is correctly assigned.
3. Contact HMRC: If you believe the BRX tax code has been applied incorrectly, contact HMRC with your details, including your National Insurance number and income information.

How to Change Your NT Tax Code?

The NT tax code is a unique designation where no tax is deducted from your earnings. It typically applies in specific situations, such as redundancy payments, income from certain expatriate circumstances, or adjustments after tax overpayment. If you need to change your NT tax code—whether it’s applied incorrectly or needs to be updated—here’s a step-by-step guide:

1. Understand Why You Need to Change the NT Tax Code

The NT (No Tax) tax code is applied in the following situations:

• Redundancy or Severance Payments: To ensure no tax is deducted from compensation payouts.
• Income as a Non-Resident: When your income is exempt under certain international tax treaties.
• Tax Refund Adjustments: When HMRC determines you have overpaid tax and temporarily applies NT for your remaining earnings to balance out the overpayment.

If this code is applied incorrectly or no longer applicable, you’ll need to request a change to avoid underpayment or overpayment of taxes.

2. Review Your Current Tax Code

Before taking action, confirm your current tax code:

• Check your payslips: Your tax code will appear on your payslip next to your income and tax deductions.
• Log into your Personal Tax Account: Use the HMRC online portal to view your current tax code and its breakdown.

If NT is incorrectly applied to your earnings, note down the details to explain the issue to HMRC.

3. Contact HMRC to Request a Change

If you suspect that the NT tax code is no longer appropriate or has been applied in error, contact HMRC directly to request a review:

• Phone: Call the HMRC income tax helpline at 0300 200 3300.
• Online: Use the “Check your Income Tax” tool in your Personal Tax Account.
• Write to HMRC: Send a letter explaining your situation to the relevant tax office (include your National Insurance number, income details, and the reason for the change).

4. Provide Relevant Details to HMRC

When requesting a tax code change, you may need to provide additional documentation or information, such as:

• Your National Insurance number.
• Details of your employer or pension provider.
• Reason for the tax code adjustment: Explain why you believe the NT code is incorrect or outdated.
• Supporting documents: Include redundancy agreements, tax treaties, or correspondence from HMRC if applicable.

5. Wait for HMRC to Process the Change

Once you’ve submitted your request:

• HMRC will review your circumstances and reassign a tax code if necessary.
• You will receive a Notice of Coding (P2), confirming the updated tax code.
• HMRC will also notify your employer or pension provider to apply the new code.

6. Inform Your Employer or Pension Provider

Ensure your employer or pension provider updates their payroll system with the new tax code. Once HMRC sends the updated tax code (usually electronically), they will implement it for future payments.

If your employer doesn’t receive the new tax code promptly, follow up with HMRC to resolve the delay.

7. Verify the Change on Your Payslip

Once the new tax code is applied, review your payslips to confirm that:

• The new code has replaced NT.
• Tax deductions align with your expected tax obligations.

If you notice any discrepancies, contact HMRC or your employer immediately.

Conclusion

Understanding the BRX tax code is essential for individuals and businesses alike. By ensuring that taxes are deducted correctly, the BRX code helps avoid underpayments and tax discrepancies.

If you are unsure about your tax code, take the time to review your payslips and consult HMRC. Staying informed can save you time, money, and unnecessary stress in the long run.

FAQs About the BRX Tax Code?

What does BRX mean on a payslip?

BRX signifies that income is taxed at the basic rate of 20% without applying personal allowance.

Is the BRX tax code always correct for second jobs?

No, if total income exceeds basic rate thresholds, adjustments may be required.

Can I claim back overpaid taxes under the BRX tax code?

Yes, overpaid taxes can be claimed after HMRC reviews your total annual earnings.

How is the BRX tax code different from the normal BR code?

While both tax at 20%, BRX is often used for secondary pensions.

What should I do if I think my BRX tax code is wrong?

Contact HMRC and provide updated information about your income.

Does the BRX tax code apply to pensions?

Yes, it is commonly used for secondary pensions to ensure correct deductions.

Why is there no personal allowance with the BRX code?

Personal allowances are reserved for primary income sources to avoid duplication.