TL;DR: Tax code 0T (the first character is the digit zero, not the letter O) tells the employer or pension provider that the employee has no personal allowance available against this source of income. It is most commonly used where the personal allowance is being used elsewhere, where the employee has not provided a P45 or completed a starter declaration, or where HMRC has reason to apply zero allowance to this income. Under 0T, income is taxed at the basic, higher, and additional rates from the first pound, without the usual tax-free chunk. 0T can be applied cumulatively or non-cumulatively (with an M1 or W1 suffix). The code is often temporary and is replaced by a cumulative personalised code once HMRC has the right information.
Last reviewed May 2026
Tax code 0T appears on UK payslips and pension statements often enough to confuse a large number of taxpayers, particularly those who read the leading digit as the letter O rather than the digit zero. The code is not random and it is not a permanent label; each part of it has a specific meaning under the PAYE rules, and the consequences for take-home pay are very different from the standard 1257L code.
This guide explains exactly what 0T means, the situations in which HMRC issues it, how it differs from related codes including BR, D0, and 0T M1, the impact on take-home pay, and the steps an employee can take to get back onto the standard personalised code as quickly as possible.
What 0T means: digit, not letter
The first character of the code is the digit zero, not the capital letter O. This is the single most common source of confusion. In tax code notation, numbers tell the payroll system how many tens of pounds of personal allowance to apply, and "0" means zero pounds of personal allowance. The "T" suffix is a generic indicator that the calculation is non-standard, often because HMRC has issued a bespoke code.
The standard tax code for a UK employee with the basic personal allowance (12,570 pounds for 2025-26) is 1257L. The 1257 part is the personal allowance divided by 10 (12,570 / 10 = 1257), and the L suffix means the employee is entitled to the standard personal allowance. 0T contrasts directly: 0 means no personal allowance, T means HMRC has set the code on a bespoke basis.
The effect of having no personal allowance is that every pound of income under the 0T code is taxed. There is no tax-free band, so the basic rate of 20 percent applies from the first pound (assuming the cumulative version) or from the first pound of each pay period (with M1 or W1 suffix). The higher rate of 40 percent kicks in at the higher rate threshold, and the additional rate of 45 percent at the additional rate threshold.
When HMRC issues a 0T code
0T is issued in several recurring situations. The first is where a new employee has not provided a P45 from the previous employer and the new starter declaration is incomplete or indicates the employee has another job. The default code is then 0T or 0T M1 until HMRC reconciles the position.
The second is for a second employment where the personal allowance is already used at the first employment. Where HMRC has clearly allocated the full personal allowance to job 1 and the second employer therefore has no allowance to apply, 0T is the technically correct code (although BR, which deducts a flat 20 percent, is more commonly used in practice).
The third is for flexible pension drawdown payments where the pension provider does not have a cumulative code for the saver. The pension provider applies 0T M1 to the taxable portion, which typically results in a large tax deduction that is reclaimed at the year end or through a mid-year P55 form.
The fourth is where HMRC has reduced the personal allowance to zero because of high adjusted net income (the personal allowance is fully tapered away at 125,140 pounds), unpaid tax from earlier years, or taxable benefits that exceed the standard allowance. In these cases the 0T may be the right code for that income source, although the underlying issue may need addressing separately.
How 0T differs from BR, D0, and 0T M1
BR (basic rate) is the simplest emergency code: it deducts a flat 20 percent on all income under the code, with no personal allowance. BR is used where all income under the code is expected to fall in the basic rate band, most commonly for a second job or a pension paid alongside other taxable income. BR is normally cumulative and assumes that higher-rate or additional-rate income arises elsewhere.
D0 deducts a flat 40 percent on all income under the code, used where the income under the code is expected to fall entirely in the higher-rate band. D1 deducts a flat 45 percent for additional-rate income. SD0, SD1, and SD2 are the Scottish equivalents at the Scottish higher (42 percent) and top (47 percent) rates.
0T (cumulative) is more nuanced than BR. It applies no personal allowance but progresses through the basic, higher, and additional rate bands as income increases over the tax year. For an employee whose total annual income under the code would push them into higher-rate territory, 0T produces a more accurate total tax bill than BR (which under-deducts in that scenario).
0T M1 (or 0T W1) is the non-cumulative version. The M1 suffix tells the payroll system to treat each pay period in isolation, ignoring year-to-date pay. This usually overcollects tax for an employee whose annual income would only reach the basic-rate band, because each month is taxed across multiple bands as if it were standalone annualised income.
Impact on take-home pay
For an employee on a 30,000 pound annual salary the standard 1257L code allows the first 12,570 pounds tax-free, then 20 percent on the next 17,430 pounds. Total annual tax is around 3,486 pounds, monthly take-home tax of around 290 pounds.
On 0T cumulative for the same 30,000 pound salary the personal allowance is removed, so 20 percent applies on the full 30,000 pounds. Annual tax is 6,000 pounds, monthly take-home tax of 500 pounds. The 0T code therefore costs an extra 210 pounds a month in tax for this employee, totalling 2,514 pounds a year.
On 0T M1 for the same salary in a typical month with 2,500 pounds gross pay, the monthly tax is calculated as if the 2,500 pounds were taxed at 20 percent on the basic-rate slice and 40 percent on any amount above the monthly higher-rate threshold (typically around 4,189 pounds gross at the higher-rate threshold). For a salary fully within the basic-rate band the monthly 0T M1 deduction is roughly the same as 0T cumulative.
For a higher earner the impact is larger. On a 80,000 pound salary, 1257L collects around 19,432 pounds a year. 0T cumulative collects 26,560 pounds (the 20 percent band fully used plus 40 percent on the rest), an extra 7,128 pounds a year, or around 594 pounds a month more.
How to get back to a standard code
The first step is to check what tax code HMRC has issued by logging into the personal tax account on GOV.UK. The tax code shown there is the code HMRC has on file. If the code is 0T but the employee believes they are entitled to the full personal allowance, the employee can update employment details online or call HMRC's PAYE helpline to ask for the code to be reissued.
The second step is to provide the employer with the P45 from any previous employer, or to complete a new starter declaration correctly. The declaration asks whether this is the first job, a continuing job, or alongside another. The right answer steers HMRC to issue the right code.
The third step is to wait for the next pay period after HMRC issues the corrected code. The employer applies the new code automatically once it is received via the Real Time Information system. If the new code is cumulative and previous periods had been overdeducted, the next pay period will include a refund of the over-collected tax.
The fourth step, for flexible pension drawdown overdeductions, is to consider using a P55, P50Z, or P53Z form to reclaim the over-collected tax in the same tax year rather than waiting for the year-end P800 simple assessment. The right form depends on whether the drawdown was a one-off, the full pot, or part of an ongoing series.
Worked examples
An employee earning 28,000 pounds a year starts a new job in August without a P45. The employer applies 0T M1 until HMRC issues the cumulative code. In August the employee's gross pay is 2,333 pounds. Under 0T M1 the tax is 20 percent of the entire 2,333 pounds, totalling 466 pounds, compared with the correct deduction under 1257L of approximately 257 pounds. The overdeduction in August is around 209 pounds.
In September HMRC issues 1257L cumulative. The September payroll applies 1257L cumulative against year-to-date pay of 4,667 pounds (April through September). The cumulative calculation indicates that the year-to-date tax should be about 514 pounds; the year-to-date tax already paid is 466 pounds (from August's 0T M1 plus any earlier amount). The September deduction is therefore around 48 pounds, materially less than the standard monthly deduction, because the system is refunding the prior overcollection.
For a pension saver drawing 20,000 pounds as their first flexible pension payment (5,000 pounds tax-free, 15,000 pounds taxable), the provider applies 0T M1. The 0T M1 calculation on a single payment of 15,000 pounds taxable typically deducts around 5,500 pounds in tax (rough order of magnitude, depending on the timing within the tax year). The saver's actual tax due on a 15,000 pound payment depends on their other income; with no other taxable income the tax due is around 500 pounds (15,000 minus 12,570 personal allowance, 20 percent on the 2,430 remainder). The overpayment of around 5,000 pounds is reclaimed via a P55 mid-year or via the year-end P800.
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 a separate set of bands with starter and intermediate rates. No invented HMRC reference numbers, employee details, or payroll examples beyond the structural illustrations have been used.
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. Anyone with concerns 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 does tax code 0T mean?
Tax code 0T means the employer or pension provider is required to apply no personal allowance to this income. The digit zero is the first character, not the letter O. Income is taxed at the basic rate of 20 percent (and higher and additional rates as income rises) from the first pound. 0T is most commonly used as an emergency code where HMRC does not yet have the right cumulative code, or where the personal allowance is being used against another income source.
Is 0T the same as BR?
No. BR deducts a flat 20 percent on all income under the code, suitable for a second job where the personal allowance is fully used at the first job and where the second-job income is expected to remain within the basic-rate band. 0T applies the basic, higher, and additional rate bands as income rises, without the personal allowance. For higher earners 0T is more accurate than BR; for lower earners with multiple jobs BR is usually the right code.
How do I get my tax code changed from 0T?
Log into the personal tax account on GOV.UK and check the tax code HMRC has on file. If the code shown is 0T and you believe you are entitled to the full personal allowance, update your employment details online or call HMRC's PAYE helpline to request a reissue. Providing your employer with the P45 from your previous employer, or completing the new starter declaration accurately, usually triggers the correct cumulative code within a pay period or two.
Will I get a refund if I have been on 0T?
Yes, in most cases. Once HMRC issues the correct cumulative code, the next pay period's PAYE calculation reconciles year-to-date pay against year-to-date tax under the new code and refunds any over-collected tax automatically. For flexible pension drawdown overdeductions, the refund typically arrives via a P800 simple assessment after the year end, or earlier via a P55, P50Z, or P53Z reclaim form.
Why is my pension lump sum taxed under 0T?
HMRC requires pension providers to apply 0T M1 to flexible pension payments where they do not have a cumulative tax code for the saver, which is normally the case the first time a saver draws from a pot. The result is a large tax deduction at source, which is reclaimed after the year end through a P800 or mid-year through a P55, P50Z, or P53Z form depending on the type of drawdown.
