Since 6th April 2015, the statutory rule that deductions of tax cannot exceed 50% of income extends to all tax codes. Previously this applied to K codes only. This reduces the tax that an employer can deduct to no more than 50% of an employee’s income and avoids hardship for the employee.

If an employee has a change in tax code for example to a BR, D0 or D1 part way in the tax year - but the tax code is still cumulative, BrightPay will look at the YTD earnings and try to recover tax at that new rate for the whole tax year based on this newly issued tax code.

As the whole tax years' earnings from April are included in the calculation, it is likely that a change to one of these codes has resulted in an underpayment of tax YTD. So rather than see a 20%, 40% or 45% tax deduction, the tax could be at 50% as the underpayment is being recovered - but the overriding regulatory limit will only allow 50% of an employee's income to be taxed.