What is an NT tax code?
NT means no tax to pay on this income. Your employer is being instructed by HMRC not to deduct any tax from this income source.
Why am I not paying any tax on this income?
You have been given code NT because you are declaring income in another way that has been agreed by HMRC, perhaps because you have self employed income.
Code NT can be issued on a week 1/month 1 and a cumulative basis. Employers are told to keep a record of pay, not to give any refunds and, obviously, not to take off any tax if it is with week 1/month 1. If it is without week 1/month 1 then they can give refunds by totaling all of the pay and tax since 6th April to calculate the requisite amount.
When is the NT code used?
There is a very clear list of 7 circumstances in which tax code NT applies:
- Bankruptcy
If you are declared bankrupt and are still employed or receiving pension payments then code NT can be used from the start date of bankruptcy until the following April. - Double Taxation Agreements
If you live in another country that has a double taxation agreement with the UK then you may get code NT. This means you won’t have to pay tax on the same assets and/or income in both your country of residence and the UK. - Statutory Exemptions
If payments are not defined as ‘pay’, for example disability pensions or exemptions for particular injuries. - National Insurance only payments
You may be liable to pay National Insurance even if PAYE is not applicable to your situation. This would be recorded and reported accordingly by your employer on the FPS. - Particular professions
The Employment Income Manual and PAYE Manual lay out what is and isn’t considered taxable PAYE income by HMRC. - Ministers of Religion
This is only in particular circumstances. For example if you are a monk or nun and have given your pension, as part of your ‘worldly goods’, to your order. - Entertainment Industry
The ‘7 Day Rule’ enables those working in the film and TV industry to get payments for any work that lasts up to 6 days without having tax deducted by employers. National Insurance payments are paid as usual, with confirmation recorded on FSPs.
Other workers in the entertainment industry may have an agreement with HMRC about their code NT status, like a Reserved Schedule D status.
Non resident NT tax code
If you are a UK non resident it is common to receive an NT tax code on some or all of your UK income. UK Non residency tax is complex and the rules vary depending on where you live and a number of other factors. Our free UK non resident tax guide can help you find out more.
Do I still pay National Insurance?
Yes, most code NT situations still have a requirement for National Insurance payments to be paid as usual and confirmed through Full Payment Submissions provided by your employer.
Tax Rebates
Querying your eligibility for a tax rebate is always a good idea especially if you have a less than average tax position, which is the case for many tax payers with an NT tax code. You find out more about our services and how we can help you here.
