What is an OT tax code?
The tax code OT means that you have no tax free personal allowance to set against your taxable income.
Not having any tax free personal allowance can result in you paying more income tax than is necessary.
The personal allowance is used by HMRC to generate your tax code meaning if it’s wrong you won’t have a correct tax code.
If you have an OT tax code and have only one form of PAYE income it is likely that the tax code is not correct because you will not be given any tax free personal allowance.
Why do I have the tax code OT?
The main causes of being given the OT tax code are:
- You’ve started a new job and you can’t give your new employer your last P45 and didn’t complete a P46.
- Your tax free personal allowance has been used up.
- You have started with a new employer and you couldn’t give them enough information to complete a starter checklist.
How much income tax do I pay with an OT tax code?
The amount of income tax you will pay with the OT tax code is not set at a flat rate.
The percentage you will pay depends on how much you earn with the OT tax code taking into consideration all rates of tax.
The most common tax rate is basic rate which is set at 20% of all of your taxable earnings meaning the OT tax code will result in you paying 20%.
For a taxpayer on a standard rate this will yield identical results to the BR code (a constant 20% reduction).
If you are a higher or additional rate taxpayer the 0T code imposes taxes at rates of 40% (for higher rate) and 45% (for addtional rate).
Am I due an OT tax code tax rebate?
If you have had an OT tax code it’s possible you will overpay income tax and be due a tax rebate.
So, if you have had an OT tax code incorrectly in the previous 4 years you could be owed a backdated income tax rebate.
Any tax rebate calculated for the current tax year will normally be repaid through your salary payment.
How do I change my OT tax code?
To change or check the accuracy of your OT tax code you should firstly try using your personal tax account or HMRC app.
After reviewing your OT code online you can call HMRC on 0300 200 3300 for further assistance.
HMRC are also known as the tax office and provide free support over the phone or online.
If your tax code needs changed they can adjust your code over the phone and then send your employer (or other source of income) your new code so they can start using it as soon as possible.
If you have overpaid income tax because of an OT tax code you will receive any refund of tax from HMRC after your tax code has been changed.