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.

The OT code includes the letter ‘O’ for ‘Other’ and the letter ‘T’ for ‘Temporary’. This temporary aspect of the OT code is important as it is commonly used as a temporary measure while HMRC collects the required information to give you the correct tax code.

The personal allowance is the amount of income you can earn free of tax.

OT tax codes don’t include any tax free personal allowance  which can result in you paying more income tax than is necessary.

If you have an OT tax code (or SOT in Scotland) 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.
  • You have started with a new employer and you couldn’t give them enough information to complete a starter checklist which can be used instead of a P45 form.
  • You have more than one job (or pension income) at the same time.
  • Your tax free personal allowance has already been used up.

How much 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 additional rate).

OT tax codes and changing employer

If you fail to provide a P45 or enough information to your employer for the completion of a Starter Checklist, they will often assign you a code 0T.

To avoid the OT code being operated you should make sure you provide your new employer with your last P45 or what they need to process a starter checklist.

Is OT an emergency tax code?

The OT tax code can be classed as an emergency code in cases where for example you are unable to provide your P45 to your employer.

In a situation where your personal allowance has already been used up against earnings from another employment or pension the OT tax code can be used correctly to make sure you don’t underpay tax.

Am I due an OT tax code refund?

If you have had an OT tax code it’s possible you will overpay income tax and be due a OT tax code refund.

HMRC can adjust your OT code when they have all of the income and tax information they need to update your code.

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.

OT tax code refund for current tax year:

Any tax rebate calculated for the current tax year will normally be repaid automatically through your salary or pension provider.

OT tax code refund for previous tax years:

If you have had an OT tax code incorrectly in any of the previous 4 tax years you could be owed a backdated income tax rebate.

OT tax code refunds from past years will be explained in a letter called a P800 tax calculation which HMRC will send out for each tax year.

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 the free HMRC app which provide easy online access to your tax code information.

Your employer is unable to change your tax code leaving you with contacting HMRC as the only way to change your tax code.

After reviewing your OT code there will be options for you to update HMRC online or you can call HMRC on 0300 200 3300 for further assistance.

If your tax code needs changed HMRC 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.

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