The "0T" tax code is essentially a default tax code used by HMRC when one or more of the following happens;
- when your personal allowance has been used up.
- when you've started a new job and your new employer does not have your tax code details. Therefore, without the necessary details to assign the correct tax code, an employer may use a 0T tax code.
What does the 0T Tax Code Mean?
This tax code means that you won't have any personal allowance remaining, and thus, all income will be taxed from the first pound earned. So, it`s vital that you`ve got to fix it if you see a 0T Tax Code on your payslip.
Despite its immediate implications, the 0T tax code should be seen as a temporary measure.
Is 0T Tax Code an Emergency Tax Code?
No, the 0T tax code is not considered an emergency tax code in the traditional sense. An emergency tax code refers to a temporary code that is assigned when your employer does not have enough information to calculate your tax correctly. In contrast, the 0T tax code occurs when one's personal allowance has been exhausted or when starting a new job, and necessary details are not available. Therefore, while it may feel like an emergency at first glance, it is not classified as an official emergency tax code.
It is simply a temporary measure used to ensure that you are paying the correct amount of tax until your employer can assign your actual tax code. However, it's important to act promptly to fix the 0T tax code to avoid overpaying your taxes.
How Much Tax Will You Pay on an 0T Tax Code?
With a 0T tax code, you pay tax on all your income without the benefit of any Personal Allowance (currently at £12,570). The rate at which you pay tax is determined by the income tax bands set by the government. As of the current tax year, this means:
- You pay 20% on income up to £37,700 (basic rate)
- You pay 40% on income between £37,701 and £125,140 (higher rate)
- And you pay 45% on income over £125,140 (additional rate)
However, the precise amount you will pay can vary depending on other factors in your income and tax situation.
How do I Fix My 0t Tax Code?
To rectify a 0T tax code, you should ensure that your employer has all the necessary information, including your P45 from your previous job. Providing these details will allow your employer to assign the correct tax code. Can`t find your P45? You, then should contact HMRC`s Income Tax Department at 0200 300 3300.
It's worth noting that while the 0T tax code can be used in emergency circumstances, it is not classified as an official 'Emergency Tax Code' like the codes Tax Code BR, 'D0' or 'D1'.
To learn more about different tax codes and what do they mean check our blog here.