Understanding the NT Tax Code and When You Need One
If you’ve come across the NT tax code and aren’t sure what it means, you’re not alone. This guide explains everything in simple terms — including who needs it, how to apply, and the latest updates.
Whether you’re living abroad or planning to withdraw from a UK pension, understanding the NT tax code can help you avoid paying unnecessary UK tax.
An NT tax code (No Tax) is a special tax code issued by HMRC that allows individuals to receive certain types of UK income without income tax being deducted at source.
This is most commonly used by:
- Non-UK residents
- Individuals receiving a UK pension while living abroad
In simple terms, an NT tax code means your income is paid gross (without UK tax deductions) when you are not liable for UK tax.
When Do You Need a NT Tax Code?
You may need an NT tax code if:
- You live outside the UK and receive income from a UK pension
- You qualify as a non-resident under the Statutory Residence Test
- You are covered by a double taxation agreement (DTA)
- Your income is incorrectly being taxed in the UK
Without an NT tax code:
- Your pension provider must deduct PAYE tax
- You may end up overpaying tax unnecessarily
How to Apply for an NT Tax Code in 2026
If you have a UK pension (such as a SIPP), it is usually taxed under PAYE. However, non-residents may be eligible to receive this income without UK tax deductions.
To do this, you must apply for an NT tax code through HMRC.
Understanding the NT Tax Code Application Process
To begin your application, you need to contact HMRC to confirm which forms apply to your country of residence.
- UK Callers: 0300 200 3300
- Overseas Callers: +44 135 535 9022
You can also find the relevant forms and guidance online here.
Once approved:
- HMRC will issue your NT tax code
- Your pension provider will be notified
- Future payments will be made without UK tax
Key Updates for 2026
Here are the latest updates affecting the NT tax code process:
Digital Processing Improvements:
- Faster processing for online applications
- Paper submissions may still take longer
Processing Delays:
- High demand means applications can still take several months
- Start early to avoid delays
Emergency Tax Still Applies Initially:
- First withdrawals are often taxed under emergency codes (e.g. 0T Month 1)
- Refunds may be needed later
Tax Band Awareness:
- Changes to tax bands may affect initial deductions
- Always check thresholds before withdrawing
Starting the Process
1. Initiating an Income Withdrawal
- To establish a tax record with HMRC, you must first withdraw a nominal sum from your pension. If you have not received a P60 within the last 12 months (which is only applicable if you were previously working in the UK), this initial withdrawal is necessary to trigger a tax code assignment.
- Your pension provider or one of our advisers, can assist in processing a small payment to ensure your details are registered on their payroll system. This first withdrawal will typically be taxed under an emergency tax code (0T Month 1). Until the NT code is officially recognized, it is advisable to limit drawdown withdrawals to a maximum of £1,000 to minimize potential tax deductions. The initial tax code assigned is often 1257L M1, which provides a fraction of the UK personal allowance (new threshold for 2025 to be confirmed).
- The exemption process can take several months, and if you receive additional UK-sourced income, your tax code may be adjusted accordingly.
2. Completing the Required Tax Forms
Once you have made an initial withdrawal and received your tax code, the next step is to complete the appropriate tax exemption form.
- If your country has a specific tax agreement with the UK, you must use the designated country-specific form available on the UK Government website.
- If your country does not have a designated form, complete the Form DT Individual, which applies to general double taxation agreements.
- Additionally, you should submit Form P85, which officially notifies HMRC that you have left the UK and wish to be treated as a non-resident for tax purposes.
After filling out the necessary forms, they must be submitted to your local tax authority in your country of residence. The relevant section of the form must be completed and stamped by your tax office before it is sent to HMRC.
3. Additional Considerations for Large Withdrawals
If you plan to withdraw more than £100,000 within a single tax year, you cannot apply for an NT tax code. Instead, you are required to complete a Self-Assessment tax return. The process involves:
- Registering for Self-Assessment to obtain a Unique Taxpayer Reference (UTR) number.
- Filing an SA100 Form: This is the standard Self-Assessment tax return form.
- If you are a non-UK resident, you also need to complete the SA109 Supplementary Pages.
- Filing the HS304 Claim Form to claim tax relief under a double taxation agreement.
4. How to Reclaim Overpaid Tax
If tax has been deducted before your NT code was applied, you may be eligible for a refund. Overpaid tax can be reclaimed in one of two ways:
- Through Payroll: If HMRC provides the corrected tax code within the same UK tax year, your pension provider can refund the excess tax via payroll.
- Directly from HMRC: If the refund is not processed through payroll, you can claim it directly from HMRC by contacting them at the details provided earlier.
Final Thoughts
Applying for an NT tax code can take time, but it’s essential if you’re a non-UK resident receiving UK income.
Getting it right means you:
- Avoid unnecessary tax deductions
- Improve cash flow
- Stay compliant with HMRC rules
Before making large withdrawals, always confirm your tax position. If needed, seek professional advice to avoid costly mistakes.
If you have any questions about the NT tax code or need help with your application, feel free to contact us — we’re here to help make the process simple and stress-free.
