0T means zero Tax-free pay — all income from this source is taxed at 20%, 40%, or 45% with no personal allowance. Often an emergency code or triggered by exhausted allowance.
Zero -- that is your Personal Allowance when HMRC assigns the 0T tax code. Every pound you earn from that income source is taxed, starting at 20% and climbing to 40% or even 45% as your earnings increase through the tax bands. Unlike BR (which charges a flat 20%), 0T applies the full progressive rate structure, meaning higher earners on 0T pay significantly more.
Both 0T and BR remove your Personal Allowance. The critical difference is how income tax is calculated.
BR: flat rate Every pound taxed at 20%, regardless of how much you earn from that source. If you earn £60,000 on a BR code, all £60,000 is taxed at 20% = £12,000.
0T: progressive bands Income is taxed through the full band structure. The first £37,700 at 20%, the next £87,440 (up to £125,140) at 40%, and everything above £125,140 at 45%.
Here is the difference on £60,000 of income:
| Code | Calculation | Tax due |
|---|---|---|
| BR | £60,000 at 20% | £12,000 |
| 0T | £37,700 at 20% + £22,300 at 40% | £16,460 |
| Difference | £4,460 more on 0T |
This matters because 0T can produce a much higher tax bill than BR on the same income. If HMRC has assigned 0T when you should be on BR (or vice versa), the financial impact is substantial.
There are four main reasons HMRC assigns 0T. Some are temporary, some are permanent, and each requires a different response.
1. New job without a P45 or starter checklist (emergency code). This is the most common reason. When you start a new job and your employer does not have your P45 or a completed starter checklist, HMRC may assign 0T as a temporary emergency code until they receive the information they need. In this scenario, 0T is usually combined with W1 or M1 (non-cumulative basis), appearing as 0T W1 or 0T M1 on your payslip.
2. Your entire Personal Allowance is allocated elsewhere. If you have multiple income sources and your full £12,570 allowance has been assigned to another employer or pension provider, the remaining sources may receive 0T. This is similar to BR, but HMRC uses 0T when it wants progressive band taxation applied rather than a flat rate.
3. Your income exceeds £125,140 (allowance fully tapered). The Personal Allowance tapers by £1 for every £2 of income above £100,000. At £125,140, the allowance reaches zero. If your income is at or above this level, 0T may be your permanent code. At this point, every pound is taxed at the higher or additional rate.
4. HMRC has incomplete information about your circumstances. If HMRC cannot determine your correct allowance due to missing data, conflicting employer reports, or unresolved queries, they may issue 0T as a safe default that prevents under-collection of tax.
If 0T is wrong and you should have 1257L, the cost depends on your income level:
| Annual income | Tax on 0T | Tax on 1257L | Annual overpayment | Monthly overpayment |
|---|---|---|---|---|
| £20,000 | £4,000 | £1,486 | £2,514 | £210 |
| £35,000 | £7,000 | £4,486 | £2,514 | £210 |
| £50,000 | £11,432 | £7,486 | £3,946 | £329 |
| £60,000 | £15,432 | £11,432 | £4,000 | £333 |
At incomes above £50,270, the 0T overpayment is worse than BR because 0T pushes income into the 40% band sooner. At a £50,000 salary, being on 0T incorrectly costs you nearly £4,000 per year.
0T is correct if:
0T is probably wrong if:
The fix depends on why you have 0T in the first place.
If it is an emergency code at a new job:
If HMRC records are wrong:
If your allowance is genuinely zero (income above £125,140):
0T is correct in this case. No fix is needed. However, verify that HMRC's estimate of your income is accurate. If they are overestimating your income (perhaps based on a bonus from a previous year that is not recurring), you may be entitled to a higher allowance than zero.
Yes. Any tax overpaid while on an incorrect 0T code is refundable.
During the current tax year: Once HMRC issues a corrected cumulative code, your employer recalculates your tax from 6 April. The overpayment is refunded through your wages, usually in the next pay period after the code change. If the overpayment is large (several months on 0T), expect a noticeably larger net pay for that month.
After the tax year ends: HMRC issues a P800 tax calculation showing any over- or underpayment. You can view this in your Personal Tax Account. Overpayments are refunded either directly to your bank (if you set up a repayment) or by cheque.
For previous years: You can reclaim overpaid tax for up to four prior tax years by contacting HMRC or submitting a Self Assessment return.
Waiting too long to act. Every month on an incorrect 0T code costs hundreds of pounds. A £35,000 earner overpays £210 per month. Over six months, that is £1,260 you could have in your pocket instead of sitting with HMRC.
Confusing 0T with BR. They are not the same. BR is a flat 20%. 0T applies progressive bands. On higher incomes, 0T costs significantly more than BR. If you are on 0T but your situation calls for BR (second job, basic rate taxpayer), you are paying too much.
Not providing a P45 to a new employer. This is the most preventable cause of emergency 0T codes. Keep your P45 safe when you leave a job and hand it to your new employer on your first day.
Assuming 0T M1 or 0T W1 will fix itself. It often does, but not always. If you are still on a non-cumulative 0T code after three months, contact HMRC. Do not assume the system will self-correct.
Ignoring 0T on a small second income. Even if your second income is modest, 0T taxes it through all bands rather than at a flat rate. On a second income of £10,000, 0T and BR both charge 20%, so the difference is negligible. But above the basic rate band width, the gap widens rapidly.
Related tax codes: 1257L tax code | BR tax code | W1 tax code | M1 tax code
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