NT Tax Code: Meaning, NI and Refunds

NT stands for no tax. It tells payroll to stop deducting Income Tax at that job or pension. An NT code applies to the particular income source on the notice; check other jobs or pensions separately.

HMRC uses NT for specific cases. Someone earning below the Personal Allowance can usually have a numbered code such as 1257L and still pay no Income Tax. Low earnings alone do not establish that NT is the appropriate code. See HMRC’s explanation of code letters.

Examples of circumstances HMRC considers for NT

Circumstance	What to check
A specific exemption or double taxation agreement	HMRC must establish the applicable treatment. Living abroad alone does not establish entitlement to NT.
Certain work assessed outside PAYE	HMRC lists some professional and entertainment arrangements where earnings are taxed another way and NI may remain payable.
Bankruptcy in England, Wales or Northern Ireland	A nil-tax code can apply during the bankruptcy tax year. Check the notice and any separate payment arrangements.

These are examples rather than a complete eligibility list. HMRC’s guidance also covers particular pensions and religious arrangements. Ask HMRC about the reason for your code and ask payroll which notice it received. See the official list of NT cases.

NT changes PAYE Income Tax. Employee NI depends on your earnings, category and circumstances. Pension contributions, student loan repayments and authorised or statutory deductions have their own rules, so a payslip can show NT and still have deductions.

Check each deduction against its own earnings basis. Gross pay, taxable pay, NI-able pay and pensionable pay can differ. Ask payroll to explain the line you are querying. Our payslip deductions guide shows what to compare.

Assume a valid NT instruction on a non-cumulative basis, £2,500 monthly gross and NI-able earnings, NI category A, and no pension, loans or other deductions in 2026/27. This example shows the current month without an earlier-tax refund.

Monthly payslip with NT and category A NI

Payslip line	Amount
Gross pay	£2,500.00
PAYE Income Tax	£0.00
Employee National Insurance	£116.16
Take-home pay	£2,383.84

The NI calculation is (£2,500 − £1,048) × 8% = £116.16. Take-home is £2,500 − £116.16 = £2,383.84. A different NI category, pension or other deduction changes the result. Employer NI is a separate employer cost. See HMRC’s 2026/27 NI rates.

The basis of the instruction matters. Look for M1, W1, X or NONCUM and ask payroll if the payslip displays the basis separately.

How HMRC tells employers to operate NT

Instruction	Treatment of earlier tax
NT on week 1 or month 1	Stop deducting tax when the instruction is received. Keep pay records and make no refunds under that instruction.
NT on a cumulative basis	Use pay and tax totals since 6 April to calculate any deduction or refund. Refunds can be made.

HMRC’s PAYE service defaults NT to week 1 or month 1. Ask payroll about the actual notice and effective dates before expecting earlier tax back. See HMRC’s NT operating instructions.

HMRC can issue a nil-tax code for the remainder of the tax year when someone becomes bankrupt in England, Wales or Northern Ireland. Check with your trustee or official receiver whether money previously deducted as tax must be paid under a separate arrangement. The payslip increase needs to be considered alongside that arrangement.

The Insolvency Service explains that the extra pay can be claimed by the trustee as part of an income payment agreement or order. See its guide to suspended Income Tax payments.

Scottish sequestration and trust deeds follow different rules. HMRC’s insolvency guidance says an NT code is not applied because of Scottish bankruptcy, including where the employer is elsewhere in the UK. See HMRC’s bankruptcy and nil-tax guidance.

For other valid NT cases, the code itself is used across the UK without an S or C prefix. Check the reason for NT separately from where you live.

Two codes with different PAYE instructions

Code	PAYE treatment at that income source
NT	No Income Tax deducted through PAYE.
0T	No Personal Allowance. Tax is charged through the applicable bands.

In 0T, the first character is the number zero. Copy the complete code from your payslip before checking the deduction. A code change can also change the calculation basis, so compare both fields.

Compare your payslip with your HMRC account and coding notice. Ask payroll when the instruction arrived, which source it applies to and whether it is cumulative. Payroll can investigate an entry or processing error; HMRC can review the decision behind an issued code.

Use Check your Income Tax to review employment, pension and income details. Update anything missing or incorrect. If the NT reason is unclear, follow HMRC’s code correction guidance. Tax may still be payable through another route or if a code was applied incorrectly, so establish the reason before budgeting around a lasting increase.