Seeing 0T on your payslip can be worrying, especially if your take-home pay is lower than what you expected. Although a ‘0T’ tax code does not necessarily mean you’ve done anything wrong, it should still be checked with caution.

A 0T tax code means HMRC has not given you any tax-free Personal Allowance for that income. So your employer will deduct tax from your entire earnings, rather than allowing the usual tax-free amount first. Ouch!

Why is my tax code 0T?

If you’ve opened your payslip, spotted 0T and immediately thought “that doesn’t look right”… you’re not alone.

As accountants, we see this one crop up quite often. The good news? In many cases, it’s a temporary tax code that appears because HMRC doesn’t yet have all the information they need to apply the right Personal Allowance.

The frustrating bit? While HMRC is working things out, a 0T tax code means your tax-free allowance isn’t being applied to that income. So, you could end up paying more tax than expected until your code is corrected. If you’re a higher-rate taxpayer, the difference can be particularly painful.

To help you figure out why the 0T tax code has appeared on your payslip, let’s look at the situations we see most often.

1. You started a new job

This is the one we see most often. Starting a new job should be exciting, not frustrating when you discover that your payslip looks very different to what you expected. If your new employer doesn’t have all your previous tax information, HMRC may temporarily issue a 0T tax code.

A real example:

Sarah was made redundant at Company A and started a new role at Company B shortly after. As she started her new job just before payroll was processed, her new employer didn’t have all the information needed to work out her tax code. As a result, Sarah was temporarily placed on a 0T tax code.

This happened because HMRC didn’t yet know whether Sarah had already used her Personal Allowance earlier in the year. Once HMRC receives the correct information, they can update her tax code and her employer will apply the new one through payroll. 

What should Sarah do?

If Sarah (or you) are in this situation, you should first check that the new employer has the correct starter information and review HMRC accounts to make sure they align and are correct. Once HMRC has the missing details, they’ll be able to issue the correct tax code.

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2. You have more than one job

Another common reason we see the dreaded 0T appear is when someone has multiple sources of PAYE income. Your Personal Allowance can only be used once, so HMRC needs to decide where it should be applied. 

Example:

James has a main job where he earns a £36,000 salary. HMRC decides to apply his Personal Allowance here. He also took on a temp job on the run up to Christmas earning £5,000 total. HMRC applies a different tax code because his Personal Allowance is already being used against his main income.

However, HMRC initially didn’t have enough information to allocate allowances correctly, so a 0T tax code was used temporarily for the temp job.

What should James do?

James should first check what job HMRC has allocated his Personal Allowance to and make sure both employers have the correct information. If the 0T tax code was only applied because HMRC didn’t have enough details, updating his employment information could allow HMRC to issue a new tax code.

However, if James’ Personal Allowance has already been used against his main job, a different tax code on his second job may be correct. If in doubt, it’s worth James speaking to the payroll department at his temp job and to HMRC. 

3. You receive income from a pension or another source

This one catches people out because many assume their tax code only relates to their salary. However, HMRC looks at your overall taxable income when working out your tax position.

For example, you might have:

• Employment income alongside a workplace pension.
• More than one pension.
• Taxable benefits through your employer, such as a company car.

If HMRC needs to collect tax from one income source but can't apply your Personal Allowance to it, a 0T tax code may be used.

What should you do?

If you have multiple sources of income and you're not sure why you've been given a 0T tax code, the first place to check is your HMRC online account. Make sure all of your income sources are listed correctly and that your Personal Allowance has been applied where you'd expect it.

If anything looks wrong or is missing, contact HMRC so they can review your tax code and update it if necessary. In many cases, once they have the correct information, they'll issue the appropriate tax code and any overpaid tax can be refunded.

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How much tax will I pay on an 0T tax code?

When you're on an 0T tax code, it's a bit like your personal allowance has decided to take a holiday – without you.  Usually, you'd get a nice chunk of income (£12,570 for 2026/27) that's free from tax. But under 0T, every penny you earn starts waving hello to the taxman.

How it works

If you're a basic rate taxpayer earning, say, £25,000 annually, usually you'd only be taxed on £12,430 (that's after your personal allowance). But with 0T, your entire £25,000 gets taxed. It's a bit like going from paying tax on a smaller slice of your income cake to the whole cake itself.

And for those in the higher tax brackets? Brace yourselves. If you're earning above £50,270, normally only the amount over your personal allowance and basic rate band gets taxed at the higher rate. 

With 0T, it's like the tax floodgates have opened – you're taxed right from the first pound, and more of your income could be taxed at that higher rate.

But remember, it's just a temporary hiccup while HMRC tunes your tax code to your actual financial symphony.
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Will I get a tax rebate after being on an OT tax code?

So you’ve been on the 0T tax code and now you're wondering if there's a little tax treat waiting for you in the form of a rebate. Well, the answer is a hopeful 'maybe'!

The 0T tax code is like an overly cautious friend, it makes sure HMRC doesn’t miss out on any tax while they're figuring out your correct tax code. 

But sometimes, this means you might’ve paid more tax than you needed to. And who doesn’t like getting their own back, especially when it's tax?

Here's the good news: 

If you've overpaid tax because you were temporarily on the 0T code, HMRC is usually good at catching this and will refund you automatically. This is often sorted out once they have all your correct income details and can put you on the right tax code. Think of it as a tax system boomerang – what goes around comes around.

But, it's always wise to keep an eye on your payslips and tax calculations. If you suspect you've overpaid and haven't received a rebate, you can always nudge HMRC or apply for a tax rebate yourself.

Remember, a tax rebate isn't a guarantee, but it's a strong possibility if you've been on the 0T code incorrectly.

I am on an OT tax code, how do I change it?

It's simpler than you might think. The key is to give HMRC the full picture of your income. Start by checking your payslips and P45 or P60 forms – these documents are like the breadcrumbs leading back to your correct tax code. If you've started a new job, ensure your employer has all your latest tax information. Sometimes, just updating your employer with your correct details does the trick.

If things still aren’t adding up, get in touch with HMRC directly. They can help recalibrate your tax code. You can contact them online, by phone, or  post.  Remember to have your National Insurance number and details about your income and employment handy.

OT tax code vs BR tax code

Think of tax codes as different flavours of ice cream. Some are straightforward, while others have a bit of a twist. 

In our tax code flavour spectrum, let's compare two interesting varieties: 0T and BR.

• The 0T tax code is the code where your Personal Allowance is on a break, so you're taxed on your entire income using all the tax bands (basic, higher, and additional).
  

• BR stands for Basic Rate, and it's a bit more straightforward. It also ignores your Personal Allowance but taxes all your income at the basic rate of 20% – no fuss. It's typically used for a second job or pension where your Personal Allowance is already used up by your main source of income.

So, what's the main difference? While both tax codes skip the Personal Allowance, the BR code keeps things simple at a flat 20%. The 0T code, on the other hand, is more like a wildcard – it will apply the different tax rates (basic, higher, or additional) depending on how much you earn.

This means 0T can be more unpredictable and can lead to you paying tax at higher rates if you're a higher earner. While both mean your Personal Allowance is out of the picture, 0T is the chameleon of the tax world, changing its colours based on your earnings, whereas BR is your reliable, one-flavour-fits-all option.

Decoding the 0T

In the strange and obscure world of tax codes the 0T is a loud signal that’s turned on when HMRC needs more clarity on your income. 

While it might mean higher taxes in the short term, understanding its role and knowing how to navigate back to your correct tax code can smooth out your financial journey. 

Remember, tax codes are not set in stone; they're more like signposts, guiding you towards fair and accurate taxation.