TL;DR: Tax code OT W (sometimes shown as OT W1 or OT Week 1) is a PAYE tax code that gives no personal allowance, with the W or W1 suffix telling the employer to operate the code on a non-cumulative, week 1 basis. The OT code is normally applied where HMRC does not yet have the information needed to set a proper code (most commonly a new starter without a P45) or where the personal allowance has been used up against another source of income. The result is that every pound of pay is taxed at the basic, higher or additional rate as applicable from the first pound, with no tax-free portion in that pay period. The position is normally corrected once HMRC has the right information or at the end of the tax year through reconciliation, so an OT W code is usually temporary, not a permanent loss.
Last reviewed May 2026
UK PAYE tax codes are made up of numbers, letters and (where applicable) operating-basis indicators. The number gives the annual tax-free amount in pounds, multiplied by 10. The letter (L, M, N, K, BR, D0, D1, NT, OT) describes how the code is built or how it is applied. A suffix such as W1, M1 or X tells the employer to operate the code on a non-cumulative basis. The OT W code is the combination of "no personal allowance" with "non-cumulative operation".
This guide explains exactly what OT W means, why HMRC issues it, how the tax is calculated under it, what to do if it is producing too much tax, and how the position is reconciled at the end of the tax year. The mechanics are the same for the OT M code on monthly payrolls.
The OT code on its own
The OT code means "no tax-free personal allowance". Every pound of pay from that source is taxed from the first pound, using the standard rate bands: 20 percent on the basic rate, 40 percent on the higher rate, and 45 percent on the additional rate (Scottish rates apply for taxpayers whose main residence is in Scotland). The OT code is not "emergency tax" in the strict sense (that is more commonly the 1257L W1/M1 code), but the OT code's effect is similar where the personal allowance has been used elsewhere.
HMRC uses the OT code in two main situations. The first is where a new employee starts without a P45 and has answered the new starter checklist in a way that suggests another job or pension is using the personal allowance (statements B or C on the older starter checklist, or the modern equivalent). The second is where HMRC has actively coded the personal allowance against another income source, for example a pension or a second job, leaving no allowance available for the new source.
An OT code can also be issued temporarily where HMRC has insufficient information to set any other code, for example when an employer reports a new start without a tax code instruction and the employee's tax history has not yet been matched.
The W1 (or W or X) suffix and what it changes
The W1 (week 1) and M1 (month 1) suffixes tell the employer to apply the code on a non-cumulative basis. Cumulative codes recalculate the year-to-date tax position at each pay date, so a tax code change part-way through the year can produce a refund in the next pay packet. Non-cumulative codes look only at the current pay period in isolation, ignoring everything earlier in the year.
HMRC uses non-cumulative operation when it wants to avoid a sudden refund or tax bill in a single pay packet because the cumulative position is uncertain. A new starter without a P45, where HMRC does not know what was earned earlier in the tax year, is the classic case. Operating the code week 1 means the employer cannot inadvertently refund tax that turns out to be owed.
The X suffix is a shorthand HMRC uses on some communications to mean "non-cumulative" without specifying weekly or monthly; the employer's payroll software applies it as W1 or M1 depending on the pay frequency. The functional effect is identical.
How much tax OT W actually deducts
Under an OT W code, each weekly (or monthly, for OT M) pay packet is taxed using a 1/52nd (or 1/12th) slice of the standard rate bands, with no personal allowance applied at all. For the 2026-27 tax year, the bands beyond the personal allowance (set at 0 pounds under OT) and below the higher rate threshold mean that the first slice of pay attracts 20 percent, the next slice 40 percent, and pay above the additional rate threshold 45 percent.
A weekly OT W code applies one fifty-second of the basic and higher rate band thresholds to each pay packet. For most employees on typical pay levels, this produces straightforward 20 percent deduction on most of the pay. A high earner on a one-off bonus week can hit the 40 percent or 45 percent band even though their annualised pay would not, because the W1 calculation treats one week as if it were the whole pattern.
The arithmetic differs slightly between Scottish and rest-of-UK taxpayers. Scottish bands and rates are set by the Scottish Parliament and applied to Scottish taxpayers (those whose main residence is in Scotland for the tax year), so an OT W code on a Scottish payroll uses the Scottish bands.
Why OT W is often "wrong" in practice
OT W is the right code when the personal allowance is genuinely being used elsewhere. It produces the wrong outcome (too much tax) when the personal allowance is actually available but the right information has not reached the payroll. The most common pattern is a new starter who has another job that has ended, where the P45 from the prior employer was not handed to the new employer in time.
The P45 contains the year-to-date pay and tax figures, the leaving date, and the tax code in operation. Handing it to the new employer (or using the new starter declaration to confirm it is the only job) allows the employer to operate the proper cumulative code from the next available pay date. HMRC also typically writes to the new employer directly once it picks up the new employment from real-time information (RTI) submissions, but that can take several weeks.
If the employee does have another source of income that is using the personal allowance (a private pension, a second job, self-employment with a tax-coded amount), the OT W code on the second source is structurally correct. The personal allowance can only be used once across all sources of taxable PAYE income.
Correcting an OT W code part-way through the year
The fastest correction is through the personal tax account on GOV.UK. The account shows all PAYE income sources HMRC is aware of, how the personal allowance has been allocated, the current code for each source, and a "tell HMRC about a change" route for queries. Changes made through the account usually flow to the employer within a few weeks through the next PAYE notification.
Calling HMRC directly can be faster if the code change is straightforward (a job that ended, a P45 from a prior employer). HMRC will normally issue a new code to the current employer and provide a reference number for the customer's records. The employer applies the new code from the next available pay date once the instruction has been received.
Where the right code is cumulative (such as 1257L on a cumulative basis), the next pay date after the change picks up the year-to-date refund of overpaid tax, because the cumulative code recalculates the position from the start of the year. The refund appears as a negative tax line on the payslip, or in some cases as a separate payment, depending on the employer's payroll system.
End-of-year reconciliation for an OT W code
If the OT W code stays in place until the end of the tax year and too much tax has been paid, HMRC reconciles the position after 5 April. The reconciliation process matches the year-to-date totals from the employer's RTI submissions against HMRC's records of all the taxpayer's income sources, calculates the right tax for the full year, and either issues a P800 tax calculation (showing a refund due or extra tax owed) or, for more complex cases, a simple assessment.
P800 refunds are normally issued by bank transfer through the personal tax account or, if not claimed online within a certain period, by cheque. The notices typically reach taxpayers between June and October following the tax year end. A simple assessment is sent where there is extra tax to pay and the position cannot be coded into a future year.
End-of-year reconciliation is the safety net, but it does not avoid the cash-flow cost of having extra tax taken out across the year. Correcting the code as soon as the wrong code is identified is the route that gets the right tax position in real time.
How we verified this
The structure of UK tax codes, the meaning of the OT code, and the operation of W1 / M1 non-cumulative codes reflect the HMRC PAYE manual and the GOV.UK guidance on tax codes for employees and employers. The new starter checklist and P45 process reflect current HMRC PAYE rules. The end-of-year reconciliation through P800 and simple assessment is set out in current GOV.UK guidance. Scottish tax rates and bands reflect the powers under the Scotland Act 2016 and the rates set by the Scottish Parliament. Specific figures and procedures should be reconfirmed on GOV.UK for the relevant tax year.
Disclaimer: This article is general information about UK PAYE tax codes. It is not personal tax advice. Tax codes are set by HMRC based on individual circumstances and the right answer in an individual case depends on the specific income sources, allowances and reliefs that apply. Anyone unsure about their code should check their personal tax account on GOV.UK or contact HMRC directly.
Frequently asked questions
What does the OT W tax code mean?
OT W (or OT W1) means a tax code that gives no personal allowance and is operated on a non-cumulative, week 1 basis. Every pound of pay in each pay period is taxed at the basic, higher or additional rate as applicable, with no tax-free portion. The W1 suffix tells the employer to ignore the year-to-date position and apply the code afresh in each pay period.
Why have I been put on tax code OT W?
HMRC normally issues OT W where the personal allowance has been used against another source of income, where a new starter has joined without a P45 and indicated that another job or pension is using the allowance, or where HMRC does not yet have enough information to set a different code. The non-cumulative operation prevents a refund or charge in a single pay packet while the position is uncertain.
Will I get a refund if I am on OT W?
If too much tax has been paid because OT W was the wrong code, the position is corrected either when HMRC issues a new cumulative code (the next pay date picks up the year-to-date refund) or after the end of the tax year through a P800 reconciliation. Refunds are paid by bank transfer through the personal tax account or by cheque.
How do I get off the OT W tax code?
Check the personal tax account on GOV.UK to see how the personal allowance has been allocated across income sources. If the allowance should be on the OT W source, use the "tell HMRC about a change" option to update the position, or call HMRC. Handing a P45 from a prior employer to the new employer also triggers a code change once HMRC's records catch up.
Is OT W the same as emergency tax?
OT W is similar in effect but technically different. The phrase "emergency tax" most often refers to the 1257L W1/M1 code, which gives the personal allowance but operates non-cumulatively. OT W gives no personal allowance. Both are temporary codes used while HMRC sorts out the right position; the difference is whether the personal allowance is applied in each pay packet.
