Emergency tax is a temporary PAYE arrangement used when an employer lacks full tax details, typically for a new job or pension. The emergency code gives the personal allowance but on a non-cumulative basis, so deductions can be higher than the final figure due.
In one line: Emergency tax is a stopgap code applied until HMRC supplies the correct cumulative tax code.
How emergency tax works
Emergency tax often appears when someone starts a job without a P45, or takes a first pension withdrawal. The code is applied week one or month one, treating each pay period in isolation rather than across the year.
Suppose a worker starts mid-year on an emergency month one code. Their pay is taxed as though every month repeats, so unused allowance from earlier months is ignored, which can mean a larger deduction until the code is corrected.
Once HMRC has the right information, usually from a P45 or a new starter declaration, it issues a cumulative code. Any overpaid tax is then refunded through payroll or after the tax year ends.
Emergency tax vs a normal tax code
A standard cumulative code spreads the personal allowance evenly and reconciles tax across the year. Emergency tax uses the same allowance but freezes it to the current period, which removes the smoothing effect.
The two often share the same numbers, for example 1257L, but emergency tax carries a W1 or M1 marker. The marker is the signal that the code is provisional and the calculation is not yet cumulative.
Primary source: GOV.UK: Emergency tax codes