Tax codes one by one
NT tax code
The only code that stops deductions completely, whatever the amount paid.
NT takes less over the year
£1,484.00
| 1257L | NT | |
|---|---|---|
| Tax-free amount | £12,570 | no tax |
| Tax, first month | £123.60 | £0.00 |
| Tax over the year | £1,484.00 | £0.00 |
| Take-home after tax | £18,516 | £20,000 |
Same pay every month, HMRC’s cumulative method, Income Tax only (no National Insurance).
NT stands for no tax. A payer using it deducts no Income Tax from what it pays you, however large the amount, and GOV.UK sums it up as not paying any tax on this income. It is rare: the employer guidance reserves it for very specific cases and gives the example of musicians regarded as self-employed and therefore outside PAYE. HMRC's PAYE specification adds three rules. NT applies across the whole UK, so there is no SNT or CNT. The employer must still keep a record of every payment. And when a cumulative NT code replaces another code during the year, tax already deducted can come back: someone paid £2,000 a month on 1257L from April to September has £1,142.00 deducted, and a cumulative NT from October returns £1,142.00 on the next payslip. On a week 1 or month 1 basis, NT stops future deductions but returns nothing. If NT appears on an ordinary job with no reason you recognise, check your HMRC online account.
0T or NT on a pay
Tax each month with 0T
£340.00
| With 1257L | £130.33 |
| With NT | £0.00 |
| With BR | £340.00 |
Rules read on HMRC’s texts by Radif Partners · Editorial policy · Method
What the payroll does with NT
Most codes tell the payroll how much tax-free pay to give and which rates to use. NT tells it to set the tax due to nil. The specification keeps the rest of the cumulative routine in place: the pay for each period is still added to the pay to date, and the record is kept, but the tax to date is fixed at zero. Your payslip therefore shows gross pay, any National Insurance and other deductions, and a blank Income Tax line.
Because the routine stays cumulative, the first NT payslip after another code can produce a negative figure. The employer works out tax due to date (nothing) minus tax already deducted since 6 April, and the difference is paid back to you through the payroll. The table shows that refund for someone on £2,000 a month whose code switches to cumulative NT after a number of months on 1257L.
| Months on 1257L before NT | Tax deducted on 1257L | Refunded on the first NT payslip | Tax each month after |
|---|---|---|---|
| 2 months | £380.60 | £380.60 | £0.00 |
| 4 months | £761.20 | £761.20 | £0.00 |
| 6 months | £1,142.00 | £1,142.00 | £0.00 |
| 9 months | £1,713.00 | £1,713.00 | £0.00 |
NT on a week 1 or month 1 basis
NT can also be issued with W1 or M1. The specification is clear about the difference: when a code is changed to NT on a week 1 or month 1 basis, the employer must not refund tax deducted earlier in the year. If HMRC wants that tax returned, it issues NT on a cumulative basis instead. So a payslip showing NT M1 means no tax from now on, but the earlier deductions stay where they are until HMRC deals with them, for instance after the tax year closes. NT is also one of the codes that, like every suffix code, is carried into the next tax year on a cumulative basis, so any M1 marking falls away on 6 April.
When NT is used, and when it looks wrong
HMRC does not publish a long list of NT cases. The employer guidance describes very specific situations and gives one example, musicians treated as self-employed and so outside PAYE. Outside cases like that, NT on an ordinary salary is unusual. If your code switched to NT and you did not expect it, there are two risks: tax may be missing for the year, which HMRC will try to recover later, or another code may have changed at the same time.
Check what HMRC holds in your HMRC online account: each job, each pension, and the estimated pay for the year. If something is wrong, GOV.UK's page on updating a tax code explains the next steps and says HMRC tells you and the employer of any new code within 15 working days.
NT next to the other no-allowance codes
It helps to place NT among its neighbours. 0T gives no allowance but still taxes through the bands. BR gives no allowance and charges 20% on every pound. NT gives no allowance and charges nothing. The table of all letters lines up every code side by side.
A practical point follows from this. Since NT leaves the Income Tax line empty, nothing on the payslip warns you if the code is wrong. Keep the payslips and the P60 for any year spent on NT: they show the pay the employer recorded, which is the figure HMRC compares with your other income when it checks the year.