Tax Code NT W1 Explained

What does NT W1 mean?

NT means "no tax" and is the only PAYE code that instructs your employer or pension provider to deduct zero income tax from your gross pay, regardless of how much you earn. It is uncommon and is only issued by HMRC in very specific situations: when you are a recognised diplomatic or consular employee with treaty exemption, when you are a non-UK resident whose income is taxed under a double-taxation agreement, when a pension has been moved to a Qualifying Recognised Overseas Pension Scheme (QROPS) under specific rules, or when HMRC has reviewed your overall position and determined that no tax should be collected at source - for example because your total income across all sources is below the personal allowance, or because tax is being collected another way such as through Self Assessment. Because NT switches off withholding entirely, it should never appear unless HMRC has explicitly written to you authorising it on form P2 or P6. National Insurance is unaffected by NT - your employer continues to deduct Class 1 NICs in the usual way. The W1 suffix changes how the code is applied. Instead of recalculating against year-to-date earnings every payday (the normal cumulative method), payroll treats each pay period as a fresh start. You receive 1/52nd (W1), 1/12th (M1) or one slice (X) of your tax-free allowance and basic-rate band each period, and any unused allowance from earlier in the year is ignored. That stops a refund being issued before HMRC has confirmed your figures, but it can leave you slightly overpaid until a cumulative code is reissued. W1 codes are almost always temporary holding codes that resolve within one or two pay cycles after your first FPS submission reaches HMRC.

Breakdown of the code

• NT

  Letter pair

  No Tax - payroll deducts zero income tax. Always backed by an HMRC notice (P2/P6).

• W1

  W1

  Non-cumulative weekly basis. Each pay period is treated independently - no smoothing across the year.

Worked example

Foreign embassy administrative employee with treaty exemption on £30,000 (paid monthly).

Zero income tax. Class 1 NI continues as normal.

Who should be on NT W1?

• New starters who could not provide a P45 and completed a starter checklist
• Employees whose previous employer reported their leaver pay late
• People returning to PAYE after self-employment or working overseas
• Cases where HMRC has paused a cumulative calculation pending a record review

Common problems

• Bonuses and one-off payments are taxed harder than under a cumulative code because unused allowance from earlier months is ignored.
• The code persists for three or more months - usually a sign HMRC has not received the FPS submission needed to reconcile your record.
• You have switched jobs and your former employer issued the P45 late, so the W1/M1/X code stays in place longer than it should.

What to do if NT W1 looks wrong

1. Provide your employer with a P45 from your previous job, or complete a starter checklist accurately (Statement A, B or C).
2. Wait one or two pay cycles - most emergency codes auto-correct as soon as HMRC receives the first FPS submission from your new employer.
3. If the code persists into a third payslip, sign in to your personal tax account and confirm both employments are listed correctly.
4. Phone HMRC on 0300 200 3300 quoting the date you started and the date your last job ended - they can issue a cumulative P9 the same day.
5. Once a cumulative code is reissued, any overpaid tax is refunded automatically through your next payslip.