Tax Code 0T Explained: Why You Have It and How to Fix It

Tax code 0T means your employer or pension provider must tax every pound of your pay with no tax-free Personal Allowance at all. Instead of the usual £12,570 of tax-free pay, you get nothing, and the normal rate bands are applied from the first pound — 20%, then 40%, then 45% in England, Wales and Northern Ireland. It is nearly always temporary, and if it is wrong you get the money back.

• 0T = zero allowance, but the tax bands still apply in the usual order, so higher earners on 0T pay 40% or 45% on part of their pay.
• The most common cause is a new job with no P45 and no starter checklist, or a payment made after your P45 has been issued.
• It is also the correct long-term code if your income is above £125,140, because the Personal Allowance has been tapered away completely.
• 0T M1 (or 0T W1) is the non-cumulative version: each payday is taxed in isolation, so no refund can come through payroll until the code changes.
• National Insurance is unaffected — 0T only changes your income tax.

What 0T actually means

A tax code tells your employer how much tax-free pay to give you before tax starts. The number is your annual allowance with the last digit removed, so 1257L carries £12,570 of tax-free pay across the year. In 0T, the number is zero — there is no tax-free pay at all.

The letter is a capital O in appearance only. It is written as a zero followed by T, which is why searches for the "OT tax code" and the "0T tax code" land in the same place. The T suffix means HMRC needs to review the code, usually because something about your allowances is unresolved or because other items have to be taken into account.

Crucially, 0T is not a flat rate. Your pay is fed through the normal bands as if the allowance had already been used up:

If your code begins with S (S0T), Scottish rates apply to that pay instead: 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top rate. A C0T code means Welsh rates, which currently match the rest of the UK. The zero allowance works exactly the same way in all three cases. For a full walk-through of prefixes and suffixes, see our guide to UK tax codes explained.

Why you're on 0T

There are five common reasons, and only one of them is permanent.

1. A new job with no P45 and no starter checklist

If you start work and your employer has neither a P45 from your last job nor a completed starter checklist, payroll has no basis for giving you any allowance. The default in that situation is 0T on a week 1/month 1 basis. This is by far the most frequent answer to "why am I on 0T".

2. A payment made after your P45 was issued

Once a P45 has been produced, an employer cannot reuse the old code for later payments. Anything paid afterwards — a delayed final bonus, holiday pay, commission, a share award that vests after you leave — is taxed using 0T on a week 1/month 1 basis. That is the correct treatment, not an error, and any overpayment is sorted out later by HMRC.

3. Your income is over £125,140

The Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000, and it disappears entirely at £125,140. At that point 0T is simply the accurate code. Many high earners sit on 0T for years quite correctly. A pension contribution or Gift Aid donation that brings adjusted net income back below £125,140 can restore part of the allowance, and the code would then change.

4. Your allowance is already used somewhere else

If your allowance is fully allocated to a main job or a pension, a second source of income has nothing left to set against it. HMRC often uses BR for that, but 0T appears too — particularly where the second income is large enough that a flat 20% would under-collect.

5. HMRC is missing information

A missing National Insurance number, an unreported change of employer, or a large untaxed item HMRC cannot yet quantify can all push you onto 0T while things are resolved.

0T vs 0T M1 (and vs BR)

Plain 0T is cumulative. Payroll looks at your total pay and total tax for the year to date every payday, so if your code is corrected mid-year the refund comes back automatically in your next payslip.

0T M1 (monthly pay) and 0T W1 (weekly pay) are non-cumulative. Each pay period is treated as though it were the first of the year: one twelfth of each band for monthly pay, one fifty-second for weekly. Nothing earlier in the year is taken into account, which means no refund can ever arrive through payroll while the M1 flag is on. That flag is what people usually mean by emergency tax, and you can model the effect with our emergency tax calculator.

0T is also routinely confused with BR. BR taxes everything at a flat 20% with no allowance; 0T removes the allowance but still steps up through the bands. They produce identical tax up to £37,700 of pay in the year and diverge sharply above it. Our guide to tax code BR covers that code in full.

What 0T costs a month

The cost of 0T compared with the standard 1257L code is simply the tax on the allowance you have lost: £12,570 at 20% is £2,514 a year, or £209.50 a month, for a basic-rate payer. For a higher-rate payer it is £12,570 at 40% — £5,028 a year, or £419 a month.

Worked example: £3,000 a month

Someone paid £3,000 a month (£36,000 a year) in England.

• On 1257L: monthly tax-free pay is £12,570 ÷ 12 = £1,047.50. Taxable pay is £1,952.50, all within the monthly basic-rate band of £37,700 ÷ 12 = £3,141.67. Tax at 20% = £390.50.
• On 0T M1: no tax-free pay. The whole £3,000 is below £3,141.67, so all of it is taxed at 20% = £600.
• Extra tax: £209.50 a month.

Worked example: £5,000 a month

Someone paid £5,000 a month (£60,000 a year) in England.

• On 1257L: taxable pay is £5,000 − £1,047.50 = £3,952.50. The first £3,141.67 at 20% = £628.33; the remaining £810.83 at 40% = £324.33. Total £952.66.
• On 0T M1: the first £3,141.67 at 20% = £628.33; the remaining £1,858.33 at 40% = £743.33. Total £1,371.66.
• Extra tax: £419 a month.

The second row shows why 0T and BR are not interchangeable: at £5,000 a month, 0T collects £371.66 more than BR because the higher-rate band has been reached.

Scottish taxpayers on S0T face slightly different arithmetic, because the starter, basic and intermediate bands are narrower and the higher rate starts at 42%. On £3,000 a month the monthly bands work out at £330.58 at 19%, £1,082.42 at 20%, £1,178 at 21% and the final £409 at 42% — about £698 in total, rather than £600.

National Insurance is calculated separately and is not affected by your tax code at all: 8% on earnings between £12,570 and £50,270 a year and 2% above that, whichever code you are on.

Getting it changed

Your employer cannot invent a new code. Apart from acting on a P45 or a starter checklist, they must wait for a coding notice from HMRC. So the fix is nearly always to give HMRC the missing piece of information.

1. Check what HMRC thinks you earn. Use the check your Income Tax service or the HMRC app to see every job and pension HMRC has on record, and how your allowance has been split. Duplicate or ceased employments are a classic cause of a stray 0T.
2. Hand in your P45 or complete a starter checklist. If you have just started a job, this alone usually clears 0T at the next payroll run. Choosing the right statement matters: statement A (no other job or taxable benefit since 6 April) gives you a cumulative 1257L code, statement B gives 1257L on a month 1 basis, and statement C gives BR.
3. Tell HMRC about ended employments or wrong figures. You can update employment details and estimated pay in the same online service, or contact the Income Tax helpline. HMRC then issues a P6 to your employer and a coding notice to you.
4. Check the new payslip. If the replacement code is cumulative, any overpaid tax for the year comes back through your wages, often as a single visible refund. If it arrives on a month 1 basis, the refund waits until the code goes cumulative or the tax year ends.
5. If the year has already ended, HMRC reconciles your record after the final payroll submissions and issues a P800 or simple assessment showing the refund. You can usually claim it online and be paid within a few weeks. You can go back four tax years for overpaid PAYE.

One case needs no action: if your income genuinely exceeds £125,140, 0T is correct and changing it would only create an underpayment to settle later.

What to do next

Run your code through the TaxFly tax code checker to see whether 0T fits your circumstances or is costing you money, then use the emergency tax calculator to work out how much you have overpaid so far this year. If you want the wider picture — prefixes, K codes, month 1 flags and how allowances get split across jobs — start with tax codes explained.