NT Tax Code
NT Tax Code
The NT tax code means “No Tax”. It tells your employer or pension provider not to deduct Income Tax from that particular source of income through PAYE.
Important: NT does not necessarily mean that your income is tax-free. It means no PAYE Income Tax is being deducted from that source. There should normally be a specific reason why HMRC has issued the code.
National Insurance may still be payable.
What does the NT tax code mean?
The NT tax code means “No Tax”. It tells an employer or pension provider to deduct no Income Tax from that particular source of income through PAYE.
However, an NT code does not automatically mean the income is tax-free. It means no Income Tax is being collected from that payment at source. Whether tax is ultimately due depends on why HMRC issued the code and your wider tax circumstances.
NT is a special PAYE code used in particular circumstances. If it appears unexpectedly on your payslip or pension, check why HMRC has issued it. An incorrect NT code can result in too little tax being collected and a tax bill later.
Why would HMRC issue an NT tax code?
NT is not an alternative to an ordinary tax code such as 1257L. HMRC uses it where the circumstances mean Income Tax should not be deducted through that particular PAYE source.
Working abroad or non-UK residence
An NT code can arise in certain international employment cases, including situations where a person leaves the UK to work abroad and HMRC accepts that PAYE Income Tax should not be deducted. Residence and overseas working rules can be complex, so an NT code should not be assumed simply because you work overseas.
Double Taxation Agreement relief
A Double Taxation Agreement between the UK and another country can affect which country has the right to tax particular income. Where the relevant conditions and HMRC procedures are satisfied, an NT code may be appropriate.
Special statutory or occupational cases
HMRC guidance provides for NT in a limited number of special circumstances, including certain statutory exemptions and particular professions or employment arrangements.
NI-only employment
In some cases an employment can remain within payroll for National Insurance purposes even though the earnings are not subject to PAYE Income Tax. An NT code may then be used while National Insurance is dealt with separately.
Seafarers
Some qualifying seafarers may be able to request an NT code in connection with Seafarers' Earnings Deduction. HMRC applies specific eligibility conditions, so the code is not automatic.
Other exceptional circumstances
HMRC's PAYE guidance also provides for NT in certain cases involving bankruptcy and other specific circumstances. The important point is that NT should normally have a clear reason behind it.
Is my NT tax code correct?
If you know why HMRC issued NT and your circumstances have not changed, the code may be entirely correct. If it appeared unexpectedly, it is worth checking promptly.
- HMRC has specifically issued the NT code.
- You understand the reason it has been issued.
- It relates to accepted overseas working or treaty circumstances.
- You qualify for a specific exemption or relief.
- Your current circumstances still match those HMRC considered.
- The NT code appeared unexpectedly on your payslip.
- You are working normally in the UK and do not know why no tax is being deducted.
- Your take-home pay suddenly increased substantially.
- You recently returned to the UK after working overseas.
- Your residence, employment or income circumstances have changed.
NT vs 1257L, BR, 0T and D0 tax codes
NT works very differently from most PAYE tax codes because it tells payroll not to deduct Income Tax from the relevant income at all.
| Tax code | What it generally means | Income Tax treatment | Typical context |
|---|---|---|---|
| NT | No Tax | No Income Tax deducted from that PAYE source | Specific HMRC-approved circumstances |
| 1257L | Standard Personal Allowance | Tax calculated after the available tax-free allowance | Common code for a person with one job or pension |
| BR | Basic Rate | All income from that source taxed at the basic rate | Often used for a second job or pension |
| 0T | No Personal Allowance available | Income taxed through the relevant tax bands with no allowance | Allowance used up or insufficient information in certain cases |
| D0 | Higher Rate | All income from that source taxed at the higher rate | Often a secondary income source |
Tax-code treatment depends on individual circumstances. Scottish and Welsh taxpayers have additional tax-code variations, although HMRC uses NT without an S or C prefix.
Do you pay National Insurance with an NT tax code?
Potentially, yes. An NT tax code relates to Income Tax, not automatically to National Insurance.
Income Tax and National Insurance are separate parts of the UK tax system. An employer can therefore be instructed to deduct no Income Tax under code NT while National Insurance contributions remain due, depending on the employment and the individual's circumstances.
Simple example
Suppose an employee receives £4,000 gross pay in a month and HMRC has validly instructed the employer to operate tax code NT.
The precise National Insurance position depends on the relevant NI rules and circumstances. NT should not be interpreted as meaning that all payroll deductions disappear.
NT cumulative vs NT Week 1 / Month 1
HMRC can issue an NT tax code on either a cumulative basis or a Week 1 / Month 1 basis. The distinction can matter if Income Tax has already been deducted earlier in the tax year.
NT on a cumulative basis
Payroll takes account of pay and tax already recorded in the tax year. Depending on the figures and HMRC's instruction, tax previously deducted through PAYE may be refunded through payroll.
NT Week 1 / Month 1
Payroll applies the NT instruction going forward without using earlier pay and tax to calculate a refund. You may see W1, M1 or another non-cumulative indicator associated with the coding instruction.
What should I do if I have an NT tax code?
If NT has appeared unexpectedly, do not simply assume the extra take-home pay is yours to keep.
Check your payslip
Confirm that the code actually shown against the relevant employment or pension is NT and check whether Income Tax has stopped being deducted.
Check your HMRC PAYE record
Use your HMRC online account or HMRC app to check the tax code HMRC holds for the employment or pension and review your estimated income and employment details.
Establish why NT was issued
Look for a PAYE Coding Notice or HMRC correspondence explaining the change. Consider whether overseas work, residence, treaty relief or another special circumstance applies.
Tell HMRC if your circumstances are wrong or outdated
If HMRC's information does not reflect your current position, update the relevant details. HMRC can then determine whether a different tax code should be issued to your employer or pension provider.
Consider setting aside the apparent tax saving
If you believe NT may be incorrect, consider keeping the extra take-home pay aside until the position is confirmed. If too little tax has been deducted, HMRC may seek to recover it later.
Can my employer change an NT tax code?
Your employer normally operates the tax code supplied by HMRC. If your circumstances have changed or you believe NT is wrong, the usual solution is to update HMRC so that HMRC can issue the appropriate coding instruction.
If the code shown in your HMRC account is different from the one on your payslip, raise this with your employer. If HMRC itself is showing NT and you believe that is wrong, the underlying tax-code position needs to be checked with HMRC.
Does an NT tax code mean I do not need Self Assessment?
No. A PAYE tax code and your requirement to submit a Self Assessment tax return are separate issues. Having an NT code does not by itself remove a requirement to file a tax return.
Equally, simply being registered for Self Assessment does not automatically entitle you to an NT tax code. Your filing obligations and the correct PAYE treatment depend on your individual circumstances.
If you need help completing a return, see our guide to filing a Self Assessment tax return .
NT tax code FAQs
What does NT stand for on a tax code?
NT means No Tax. It tells an employer or pension provider not to deduct Income Tax through PAYE from the income to which that code applies.
Does NT mean my income is tax-free?
Not necessarily. NT means no Income Tax is deducted from that source through PAYE. Whether the income is ultimately free of UK Income Tax depends on why the code was issued and your overall circumstances.
Why have I suddenly been given an NT tax code?
There should normally be a specific reason for an NT code. Possible circumstances include certain overseas employment, Double Taxation Agreement cases, statutory exemptions and other special cases recognised by HMRC. If you do not know why you have NT, check your HMRC PAYE record and coding notice.
Do I still pay National Insurance on tax code NT?
You may do. NT tells payroll not to deduct Income Tax; it does not automatically remove National Insurance contributions. National Insurance is calculated under separate rules.
Is NT an emergency tax code?
No. NT is a special code instructing payroll not to deduct Income Tax. Emergency tax codes operate differently and are commonly associated with codes such as 1257L on a Week 1, Month 1 or non-cumulative basis.
Can I ask my employer to put me on an NT tax code?
You should not simply choose NT because you believe no tax is due. Employers normally operate the tax code instructed by HMRC. If you believe NT should apply, the appropriate HMRC process depends on the reason you are claiming that treatment.
Can an NT tax code result in a tax refund?
It can in some circumstances. HMRC guidance confirms that where NT is operated cumulatively, payroll can take account of tax already deducted during the tax year and a refund may arise. NT operated on a Week 1 or Month 1 basis works differently.
Does the NT tax code apply in Scotland and Wales?
Yes. Unlike many Scottish and Welsh PAYE codes, HMRC does not add an S or C prefix to NT. The NT code is used regardless of where in the UK the taxpayer lives when the relevant NT conditions apply.
What happens if my NT tax code is wrong?
If NT has caused too little Income Tax to be deducted, HMRC may later calculate an underpayment and seek to collect the tax due. If you think NT is incorrect, checking it promptly can reduce the risk of a larger unexpected bill later.
Need help understanding your tax position?
If your NT tax code forms part of a wider Self Assessment or complicated tax position, The Online Accountants can help you understand your UK tax obligations and prepare the relevant return.