If an 0T tax code appear on your payslip, this indicates that HMRC has not issued an up-to-date tax code for you. HMRC issues tax codes for both employment and pension income which employers apply directly into your pay. A lack of an accurate code could mean not receiving enough tax free allowance for yourself – which could reduce net income.
Why you may be issued an 0T tax code
HMRC could assign you a 0t tax code for any number of reasons, including moving jobs without providing your new employer with your P45 or completing a P46 form, using all your tax free allowance in another job if you have more than one job, or switching from self-employed to PAYE employment and not providing them with all of the paperwork necessary to change it.
What is the tax rate of an 0T tax code?
An 0T tax code can be particularly annoying, since it typically indicates that you have no tax free pay for the pay period in question. It also means that your tax rate will be 20% at the basic rate, 40% at the higher rate and 45% at the additional rate, which can make you pay more than the correct amount of income tax in some cases.
Can I claim back on a 0T tax code?
If your tax code is 0T, this indicates that none of your annual tax free allowance (typically around £12,570) has been taken up yet. If you overpay tax due to an incorrect tax code, HMRC will refund it back to you eventually. This can take the form of an automatic repayment through your monthly or weekly salary or a direct refund at the end of the tax year. If you are one of many that complete a self-assessment tax return each year, you should be able to get the refund via self-assessment.
Best way to avoid Ot tax code
At the start of any job, your employer should have provided a starter checklist which contains the information HMRC requires in order to calculate your tax rate accurately. Be sure to review this carefully to make sure they have everything they require from you and that everything is accurate; otherwise contact HMRC immediately as this may prevent them from providing enough data needed to calculate an accurate tax rate for you.
What is the difference between a 0T tax code and a BR tax code?
A BR tax code indicates that an employee’s entire salary will be taxed at 20% and no allowance will be deducted. An 0t tax indicates that an employees salary will be taxed at basic rate (20%) as well as higher rate (40%) and additional rate (45%) if it falls into those with no personal allowance deducted.
How long will a 0T tax code last?
HMRC typically issues new tax codes between January and March each year, sending these out to employers so that they may use them as guidance for how much tax to withhold from an employee’s pay.
However, if you find yourself under this emergency code it is advisable to get in contact with HMRC or your employer immediately.
Can I claim OT tax back?
Yes you can claim back any tax overpaid as a result of any incorrect coding. At its core, an incorrect tax code should never be accepted without discussing it first with either your employer or HMRC. They should be able to confirm whether they have all of the information needed and change your code.
What to do if you’re issued with a 0T Tax Code
HMRC issues you a new tax code each year that accurately reflects your allowances, overpayments or underpayments from the prior year. Your employer then applies this new code to your salary and amends their payroll records accordingly. If you believe you were incorrectly assigned one of the codes available to you, submit a request with HMRC so they may advise your employer or visit their website to learn more about how your taxes are calculated.