Tax code NT — “No Tax”, narrow exempt scenarios
If your payslip shows tax code NT, HMRC has told this employer or pension provider to deduct no PAYE from this income. NT — “No Tax” — is issued only in specific situations where the income is not subject to UK income tax through PAYE: non-UK residence under a treaty, certain bankruptcies, narrow foreign-service rulings, or specific religious / charity cases.
What this code means
Per gov.uk's tax-code guidance, NT is the strongest of all UK tax codes in one specific direction: payroll deducts zero income tax on every pound paid under this PAYE source. It is not a generous “mega-allowance” — it is a directive from HMRC that this particular income is not in scope of UK PAYE for now. The reason behind NT might be a tax-residence determination, a treaty position, a bankruptcy ruling, or one of a handful of foreign-service exemptions.
Crucially, NT does not necessarily mean the income is tax-free. Tax may still be due — just not through this employer's PAYE. For example, a non-resident may pay tax in their country of residence; a UK seafarer claims the SED through self-assessment; a bankrupt's post-order income may be settled later. National Insurance, student loan and workplace pension contributions also continue to apply unless separately exempted.
- Zero PAYE. Payroll deducts no income tax — see the P2 coding notice for the reason.
- Not the same as tax-free. Tax may still be due elsewhere (self-assessment, foreign jurisdiction, settled post-bankruptcy).
- Always HMRC-issued. Payroll cannot self-apply NT; if you see it, HMRC put it there.
Who gets tax code NT
Per HMRC, NT is the narrowest of the suffix codes. The most common scenarios quoted on coding notices are below. Your own P2 will explain which one applies.
- Non-UK residence under a double-taxation treaty
- Per gov.uk, if you have left the UK and HMRC has confirmed you are non-UK tax resident, your UK employment or pension income may be exempt from UK PAYE under the relevant double-taxation treaty. HMRC issues NT (sometimes shown as NT-NR for non-resident) so payroll stops deducting. You are typically still liable to tax in your country of residence.
- Bankruptcy — post-order income hold
- In some bankruptcy cases, HMRC suspends PAYE on income earned after the bankruptcy order until the Official Receiver or Trustee in Bankruptcy concludes the position. NT is then issued for the affected source. Once the bankruptcy is closed, a normal cumulative code resumes.
- Seafarers Earnings Deduction — qualifying long voyages
- Per HMRC's Seafarers Earnings Deduction (SED) rules, qualifying seafarers can have UK income tax cancelled on earnings from foreign-going voyages. The mechanism is normally a 100% deduction in self-assessment, but in some cases HMRC issues NT to the employer to stop PAYE running through the year.
- Armed forces foreign-service rulings
- Certain UK armed-forces personnel posted overseas in defined operations can qualify for specific tax treatments. Where HMRC accepts a foreign-service ruling, NT may be issued.
- Ministers of religion or specific charity workers
- A narrow class of ministers and similar workers may have income tax treated under non-PAYE rules. These rulings are issued case-by-case by HMRC and an NT code is the payroll mechanism.
Worked example — £30,000 gross on NT
For comparison with 1257L at the same £30,000 salary in 2026/27:
| Step | 1257L | NT |
|---|---|---|
| Gross pay | £30,000 | £30,000 |
| Personal allowance applied | £12,570 | n/a (PAYE switched off) |
| Taxable pay | £17,430 | £0 (for PAYE) |
| PAYE | £3,486 | £0 |
| Difference | NT removes £3,486 of in-year PAYE — but the income may still be taxable elsewhere | |
That £3,486 saving is only a real saving if the underlying NT reason holds — for example you really are non-UK resident, the seafarer voyage really does qualify for SED, or the bankruptcy position really still applies. If circumstances change, HMRC withdraws NT and any uncollected tax becomes due.
Common mistakes & red flags
- Returned to the UK but still on NT. If you have come back from overseas, the non-residence basis ends and HMRC needs to know — otherwise an underpayment accrues silently.
- Bankruptcy annulled or closed. Once the Official Receiver releases the income, NT should be replaced with a normal code.
- Multiple sources both on NT. NT is granted per source for a reason. If it spreads unexpectedly, HMRC may have duplicated an instruction.
- NT plus self-assessment due. Plan cash flow — you will be settling tax outside payroll.
What to ask payroll
- “Which HMRC coding notice issued the NT code?”
- “What was the stated reason — non-residence, bankruptcy, foreign-service?”
- “Is the NT code cumulative or W1/M1?”
- “Will National Insurance, student loan and pension still be deducted?”
- “If HMRC withdraws NT mid-year, how will catch-up PAYE be applied?”
How to fix it if NT looks wrong
- Read the P2 coding notice closely. It will state the reason — non-residence, bankruptcy, SED, etc.
- Confirm whether the underlying reason still holds. Have you returned to the UK? Has the bankruptcy ended? Have you stopped qualifying voyages?
- Tell HMRC about a change. Sign in to the HMRC personal tax account or call PAYE on 0300 200 3300.
- Consider professional advice. NT is unusual enough that mis-handling it can produce large adjustments. A regulated tax adviser is often worth the cost when residence or treaty positions are in play.
Frequently asked questions
- What does tax code NT mean?
- Per gov.uk, tax code NT means No Tax — your employer or pension provider deducts no PAYE from this income. NT is used in narrow, specific cases where HMRC has determined that the income is not subject to UK income tax, or is being taxed via a different route (for example self-assessment or a double-taxation arrangement).
- Why have I been given tax code NT?
- Common scenarios include: non-UK residence under a double-taxation treaty (NT-NR), certain bankruptcy cases where post-bankruptcy income is held over until the OR settles, specific seafarers / armed forces foreign-service exemptions, ministers of religion or specific charity workers in narrow rulings, and some pension transfer cases. HMRC always issues NT after a formal review; payroll never applies it on its own initiative.
- Is NT the same as 0% tax forever?
- No. NT is granted for a specific reason and can be withdrawn if circumstances change — for example if you become UK-resident again, the bankruptcy is annulled, or the foreign-service condition ends. Keep HMRC informed of any change so the code can be revised before an underpayment builds up.
- How much tax does NT take?
- None. On £30,000 gross under NT, your PAYE is £0. National Insurance, student loan and pension deductions still apply separately. The income may still be reportable on self-assessment, depending on the reason for the NT code.
- How do I confirm NT is correct?
- Read the P2 coding notice — it will state the reason. Sign in to your HMRC personal tax account to confirm. If you are not sure whether you still qualify (you have moved back to the UK, the treaty no longer applies, bankruptcy has been annulled) speak to HMRC PAYE on 0300 200 3300 or, given the complexity, a regulated tax adviser.
Related reading
- Tax code 1257L — standard allowance
The code most NT recipients revert to when the NT reason ends.
- Tax code 0T — no allowance
Sibling code at the opposite end of the spectrum.
- Tax code K — negative allowance
For comparison — K adds to taxable pay where NT removes it.
- Every UK tax code, explained one page at a time
The full tax-code index hub.
- Wrong tax code checker
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Last reviewed
Last reviewed:
Next review:
Reviewed each tax year and sooner if HMRC changes treaty or NT code rules.
Educational guidance only — not regulated tax, financial or payroll advice. Always verify with HMRC or a regulated adviser before acting. To run a real check, the wrong-tax-code checker is the place to begin.