TL;DR: Tax code 0T (the first character is the digit zero) applies no personal allowance to income paid under this code. Every pound is taxed: 20 percent in the basic rate band, 40 percent in the higher rate band, 45 percent in the additional rate band. 0T is most often issued where a new employee has not handed in a P45, where a second job already uses the full personal allowance at the main job, or where flexible pension drawdown payments are made without a cumulative code on file. The code can be cumulative (reconciling year-to-date) or non-cumulative with M1 or W1 suffix (treating each pay period in isolation). For most employees the code is temporary and is replaced by the personalised cumulative code (usually 1257L) once HMRC has the right information.
Last reviewed May 2026
Tax code 0T appears on UK payslips and pension statements often enough that millions of employees encounter it, usually without warning, when they start a new job, take a pension lump sum, or trigger one of the routine HMRC adjustments. The code looks unfamiliar against the more usual 1257L, the deductions are higher than expected, and the meaning is not obvious from looking at it.
This guide sets out what 0T means in technical terms, the specific situations where HMRC issues it, the difference between 0T cumulative and 0T M1, how the deduction is calculated, the worked-example maths, and the practical steps to move back to the right code as quickly as possible.
The technical meaning of 0T
UK tax codes follow a fixed format: a number followed by a letter (and sometimes a suffix). The number gives the personal allowance in tens of pounds: a tax code of 1257 indicates a personal allowance of 12,570 pounds. The letter is a suffix flag: "L" for the standard personal allowance, "M" for marriage allowance recipient, "N" for marriage allowance donor, "T" for HMRC-set bespoke calculations.
Tax code 0T has the digit zero as its number and the letter T as its suffix. The zero means no personal allowance is applied to income under this code. The T means HMRC has set the code on a bespoke basis, often because the personal allowance is being allocated to another income source or because the underlying entitlement has been reduced or removed.
Crucially, the first character is the digit zero, not the capital letter O. This is the most common confusion: read on a payslip in a sans-serif font, the digit 0 and the letter O can look similar. The internal HMRC code is always "0T" with a zero.
When HMRC issues 0T
HMRC issues 0T in a defined set of situations. The first is for new starters who have not provided a P45 from the previous employer and whose new starter declaration indicates that they have another job or recent employment. The default code is 0T or 0T M1 until HMRC can match the record and issue a cumulative code.
The second is for second employment where the personal allowance is being used at the first employment. Where the trader's main job consumes all of the personal allowance, the second-job code is set so that no further allowance is given there. Some lenders or HMRC processes assign 0T in this scenario, although BR (deducting flat 20 percent) is more common in practice.
The third is for flexible pension drawdown payments. The pension provider applies 0T M1 to the taxable part of the first drawdown payment to a saver who has no cumulative code on file with the provider. This is a standard PAYE practice and results in a deduction at the basic, higher, and additional rates as the lump sum is paid, often producing a large temporary overpayment that is reclaimed at the year end.
The fourth is where the standard personal allowance has been reduced to zero. This happens when adjusted net income exceeds 125,140 pounds (full taper of the personal allowance), when there are large taxable benefits that exceed the standard allowance, or when HMRC has reduced the allowance to recover an underpayment from a prior year. In these cases 0T may be the right cumulative code, not just an emergency placeholder.
0T cumulative versus 0T M1 (or 0T W1)
0T cumulative is the long-form version of the code. The payroll system tracks pay-to-date and tax-to-date for the year and applies the code to bring the year-to-date position into line. The basic-rate band, higher-rate band, and additional-rate band are applied progressively across the year. An employee on 0T cumulative whose pay so far is below the cumulative basic-rate threshold pays 20 percent on additional pay; an employee whose pay so far is at or above the higher-rate threshold pays 40 percent on additional pay; and so on.
0T M1 (the M1 suffix means "Month 1") is the non-cumulative version. Each pay period is treated as if it were the first month of the tax year. There is no reference to pay-to-date or tax-to-date. The basic-rate slice is the monthly equivalent of the annual basic-rate threshold (around 3,142 pounds for the basic-rate slice in a typical month), the higher-rate slice is the equivalent of the annual higher-rate threshold (around 4,189 pounds gross monthly to reach the higher-rate band), and so on.
0T W1 is the weekly equivalent of 0T M1, used for weekly-paid employees. The same principle applies on a weekly basis: each week is treated in isolation.
The practical difference is most visible at year end. 0T cumulative will (assuming a steady pay pattern) collect the right total annual tax for the year as long as the code is in force throughout the year. 0T M1 typically overcollects in the early part of the tax year for low-earners and undercollects in the later part for high earners, requiring a year-end reconciliation.
How the tax is calculated under 0T
Under 0T cumulative for a typical employee, the year is divided into 12 months. The basic-rate band for the year (37,700 pounds at the basic rate, after the personal allowance, but the allowance is zero under 0T) is split into 12 monthly slices of around 3,142 pounds. Each pay period the employee's year-to-date pay is compared with the year-to-date basic-rate threshold; pay below the threshold is taxed at 20 percent, pay above the basic-rate threshold and below the higher-rate threshold is taxed at 40 percent, and so on.
For an employee earning 36,000 pounds a year (3,000 pounds a month) under 0T cumulative, the basic-rate band of 37,700 pounds is not exceeded, so all 36,000 pounds is taxed at 20 percent. Annual tax under 0T cumulative is 7,200 pounds. By comparison, under the standard 1257L code, the personal allowance is 12,570 pounds and only 23,430 pounds is taxed at 20 percent, giving annual tax of 4,686 pounds. 0T therefore costs this employee around 2,514 pounds a year more in tax.
For a higher earner on 80,000 pounds a year under 0T cumulative, the basic-rate band fills first (37,700 pounds at 20 percent equals 7,540 pounds of tax) and then the higher-rate band takes the rest (42,300 pounds at 40 percent equals 16,920 pounds of tax). Total under 0T is 24,460 pounds. Under 1257L the same earner pays approximately 19,432 pounds. 0T costs around 5,028 pounds extra.
Under 0T M1 the maths is similar in net annual outcome for a steady-pay employee but the timing differs: each month is calculated in isolation, so a month with a bonus that pushes pay above the monthly higher-rate threshold creates a temporary higher-rate deduction that would not arise under cumulative.
How to get off 0T
The first step is to check what code HMRC has on file. The personal tax account on GOV.UK shows the current PAYE tax codes for each employment and pension. If the code shown is 0T but the employee believes they are entitled to the full personal allowance against this income, they can update employment details online or call HMRC's PAYE helpline.
The second step is to provide the new employer with the P45 from the previous employer (parts 2 and 3). The P45 carries forward the cumulative tax position and triggers HMRC to issue a proper cumulative code within one or two pay periods.
The third step is to complete the new starter declaration accurately. The declaration asks whether the new role is the first job, a continuing job, or a second job alongside another. The right answer steers HMRC to the right starting code: 1257L for first jobs without another income, BR or 0T for second jobs.
The fourth step, for pensioners receiving 0T M1 on a drawdown lump sum, is to consider using a P55, P50Z, or P53Z form to reclaim the over-collected tax mid-year rather than waiting for the year-end P800. The right form depends on the type of drawdown (one-off, full pot, or part of an ongoing drawdown series).
How to read your payslip if you see 0T
The tax code is printed on every payslip. If the code shown is 0T or 0T M1, the tax deduction will be materially higher than under 1257L. Compare the cumulative tax shown on the payslip with the year-to-date pay to estimate whether the deduction is in line with expectations.
For an employee on 0T cumulative, the cumulative tax should be 20 percent of year-to-date pay (up to the cumulative basic-rate band), plus 40 percent on any pay above the basic-rate band, and so on. If the math does not align (for example the deduction is much higher because of 0T M1's per-period treatment), check whether the suffix is M1 or W1.
If the wrong code is being applied, the employer cannot change it without HMRC authorisation. The employee has to address the issue with HMRC; the employer applies the code HMRC issues. The fastest route is usually the personal tax account update or a phone call to HMRC's PAYE helpline.
How we verified this
The mechanics of tax code 0T described here reflect HMRC's published guidance on tax codes, the Income Tax (Earnings and Pensions) Act 2003, HMRC's PAYE Manual, and HMRC's published forms P50Z, P53Z, P55, and P800. The income tax rates and thresholds quoted are the statutory rates for England, Wales, and Northern Ireland for 2025-26; Scotland operates separate bands with starter and intermediate rates. No invented HMRC reference numbers, employee details, or specific payslip figures have been used; the worked examples illustrate the structural mechanics.
Disclaimer: This article is general information about UK tax code 0T under PAYE rules. It is not personal tax advice. Specific PAYE deductions depend on the individual's circumstances and on other income sources. Anyone concerned about a tax code should check their personal tax account on GOV.UK, contact HMRC's PAYE helpline, or take advice from a qualified tax adviser.
Frequently asked questions
What is tax code 0T?
Tax code 0T tells the employer or pension payer to apply no personal allowance to this income source. The first character is the digit zero, not the letter O. Every pound under the code is taxed at 20 percent in the basic-rate band, 40 percent in the higher-rate band, and 45 percent in the additional-rate band. 0T is most commonly an emergency code issued when HMRC does not yet have the right cumulative code, or when the personal allowance is being used against another income source.
Why am I on tax code 0T?
Common reasons are: a new job started without a P45 from the previous employer; a second job where the full personal allowance is already used at the first job; a flexible pension drawdown lump sum where the provider has no cumulative code on file; or a reduction in the personal allowance because of high adjusted net income, taxable benefits, or unpaid tax from earlier years. Logging into the personal tax account on GOV.UK shows the current codes and lets you flag corrections.
Will tax code 0T be corrected automatically?
Yes, in most cases. Once HMRC processes the employer's first Real Time Information submission and matches the employee to its records, HMRC issues the correct cumulative tax code. The employer applies the new code from the next pay period, and the year-to-date PAYE calculation refunds any over-collected tax automatically. The whole process usually takes one or two pay periods.
How much extra tax do I pay on 0T?
The difference depends on the salary. For an employee on 36,000 pounds, 0T costs around 2,514 pounds a year more than 1257L (the standard code). For a higher earner on 80,000 pounds, the difference is around 5,028 pounds. The extra tax is reclaimed automatically when the cumulative code is reinstated mid-year, or via a year-end P800 simple assessment from HMRC if the code is still wrong at the end of the tax year.
What is the difference between 0T and 0T M1?
0T cumulative tracks the year-to-date position and applies the code progressively across the year, with refunds when the cumulative code is corrected mid-year. 0T M1 treats each pay period in isolation, ignoring year-to-date pay. 0T M1 typically over-collects for steady earners early in the year and may under-collect for high earners at the end of the year. The M1 suffix indicates the non-cumulative version.
