Tax Credits and Emergency Tax
- What are Tax Credits?
- What must I do to get my Tax Credits?
- How do I get the benefit of my Tax Credits?
- What happens if I don't follow the procedures above?
What are Tax Credits?
Under the tax credit system every individual is entitled to tax credits depending on personal circumstances. Every individual can claim a personal tax credit. PAYE taxpayers can also claim a PAYE tax credit.
For details of the main credits see information leaflet Leaflet IT 1 (Tax Credits, Reliefs and Rates)
What must I do to get my Certificate of Tax Credits and Standard Rate Cut-Off Point?
When you start work for the first time, complete 
Form 12A (PDF, 211KB) (Application for a Certificate of Tax Credits and Standard Rate Cut-Off Point), send it to your tax office and you will receive a Certificate of Tax Credits and Standard Rate Cut-Off Point.
How do I get the benefit of my Tax Free Credits?
Your tax credits are given to you for a full tax year. So, whether you start work in the first week of the tax year or six months into the tax year, you still qualify for a full year's tax credits. As tax deductions are spread evenly throughout the year under the PAYE system, the total due is divided into 52 weekly/12 monthly amounts, depending on frequency of pay. Your employer grants these credits against your gross tax to arrive at your tax payable.
What happens if I don't follow the procedures above?
If an employer does not get either a:
- Certificate of Tax Credits and Standard Rate Cut-Off Point or
- Form P45 (parts 2 and 3) from an employee
he/she is obliged to deduct tax on the emergency basis when paying an employee's wages or salary. Under the emergency basis, a temporary tax credit is given for the first month of employment but tax deductions are increased progressively from the second month on.