Everyone who has a tax code will notice that it usually has a number and letter as part of the code.
Sometimes the tax code that you will be given for a particular job or income stream may be 0T (note that this is a zero not OT).
The zero denotes that you will not be given any personal allowance for the income that has been assigned the 0T tax code.
This may be because you have used up your personal allowance elsewhere, or perhaps you have started a new job and your employer does not have enough information for your tax code as yet.
The 0T tax code means that all of your income will be taxed for that income stream. The tax rate depends on how much you earn from that work/pension as to whether you will pay basic rate tax on the earnings or if you earn enough from that job (if indeed it is employment) to pay higher rate tax.
It is possible that a 0T tax code will be corrected down the line, as it is often used as an emergency measure, so if you believe that this is not correct it may be worth contacting the inland revenue to check that they have all of the correct information for you.
Once the Inland Revenue have all the up to date information they can send through the correct tax code to your employer and you may start to pay less tax that you would do on a 0T tax code.
If the tax code is corrected within the tax year then it is likely that you will get an adjustment to your tax once your employer has the correct code and that may involve effectively refunding tax from when you were on the 0T tax code by reducing the amount payable once the code has changed.
if it is near the end of the tax year when you are given the 0T tax code and it is not corrected before the end of the tax year (assuming it is wrong) you may need to reclaim overpaid tax from the Revenue.
In any case you can contact the Inland Revenue on 0300 200 3300.
It is generally the case that UK taxpayers will be issued with a new tax code each year. Tax codes are issued to individuals and their employers so that the employer knows how much tax they should deduct from the employee’s earnings each week or month.
Standard tax code for 2018/19
The most common tax code for those with simple financial situations in 2018/19 (for example, having only one job, no tax owing from previous years, no other employee benefits etc) is 1185L.
This standard tax code means that you are entitled to the UK personal allowance of £11,850 for the year and therefore that is the amount that you can earn before any tax is deducted.
But it may be the case that you have a different number for your tax code or perhaps your code has another letter at the end (instead of L).
If this is the case then one or more of the following situations may apply to you which may affect your tax code (and these are just some examples):
- you have earnings from another job
- you receive benefits in kind (e.g. company car)
- you owe tax from previous years
- you also have pension income
- you have or you receive a transfer of the marriage allowance
- you have earnings over £100k for the tax year
Confused about your tax code?
If you can’t figure it out why you have a particular tax code, you will probably need to speak to the Inland Revenue to check that you have the right tax code and will not be paying too little (or indeed too much) tax in 2018/19. The number to call for tax code queries is 0300 200 3300.
Or you may find it easier to check your tax code online which you can here do if you have a Government gateway ID.
Tax code letters
So the letters at the end of the tax code may also give you an indication of what your code is all about.
There are a couple of new tax codes that have been introduced recently which take account of the new transferable marriage allowance – those are the letter M if you have received a transfer of the marriage allowance and the letter N if you have given a up part of your allowance. You can find more information on those letters here.
You can check out a full list of the tax code letters and what they mean on the Inland Revenue website.