NT Tax Code: No Tax Deducted — What It Means and When It Applies
Tax code NT stands for No Tax. It instructs your employer or pension provider to deduct zero Income Tax from your income — not a reduced amount, but nothing at all. NT is one of the rarest tax codes issued by HMRC, and it should never be self-assigned. If you see it on your payslip without expecting it, contact HMRC immediately.
NT does not mean tax-free income
This is the critical point many people misunderstand. NT means no tax is being withheld at source — not that your income is exempt from tax. You may still owe Income Tax on that income; you will simply pay it differently, typically through Self Assessment at the end of the year.
Compare the three "low deduction" codes:
| Code | Tax deducted by employer | Still owe tax? |
|---|---|---|
| NT | Zero | Possibly — via Self Assessment |
| 1257L | Normal (20%/40%/45%) | No — unless other income exists |
| 0T | All income taxed, no allowance | Depends on total income |
Legitimate reasons for an NT code
HMRC issues NT codes in specific, usually exceptional circumstances:
- Non-UK tax resident: If you are not UK-resident for tax purposes, a double taxation agreement (DTA) between the UK and your country of residence may mean UK income should be taxed only in the other country.
- Specific pension situations: Certain pension payments, annuities, or maintenance payments may be legitimately NT under DTA provisions.
- Official error resolution: While a dispute about the correct amount of tax is resolved, HMRC may temporarily issue NT.
- Contract workers and umbrella schemes: Some umbrella company arrangements have (sometimes fraudulently) used NT codes. HMRC has tightened scrutiny of NT codes for contractors.
NT codes and tax avoidance
NT tax codes have been used in certain promoted tax avoidance schemes — typically involving loans in lieu of salary, offshore arrangements, or disguised remuneration. HMRC has pursued these vigorously and has largely succeeded in closing them down. If a scheme is offering you an NT code in return for an arrangement that seems too good to be true, it almost certainly is.
What to do if you have an unexpected NT code
- Do not assume it means you owe no tax — contact HMRC on 0300 200 3300 to understand why it was issued
- Check your Personal Tax Account at gov.uk for the code's history
- If you are a contractor, discuss the code with a qualified accountant familiar with IR35 and employment tax
- Ensure you register for Self Assessment if you receive NT-coded income, so you can declare and pay any tax due
Frequently asked questions
What does NT tax code mean?
NT (No Tax) means your employer deducts zero income tax from your pay. It does not mean the income is untaxable — you may still owe income tax on it through Self Assessment. NT is rare and must be issued by HMRC; never assume an employer has issued it correctly.
Who gets an NT tax code?
Non-UK tax residents, people in specific DTA-protected situations, certain pension recipients, and occasionally people in administrative disputes with HMRC. It is not given to ordinary UK-resident employees with a single job.
Is an NT tax code legal?
When issued by HMRC for a legitimate reason, yes. When used in tax avoidance schemes without genuine HMRC authorisation, no. HMRC has successfully challenged many NT-based arrangements and charged substantial penalties.
How do I get an NT tax code?
You cannot self-assign NT. Only HMRC can issue it, in circumstances where no tax withholding is appropriate. If a promoter or employer tells you they can arrange an NT code, treat this as a serious red flag.