Tax code

Joe_s_HELP

Hi, In September I was given a big promotion and was paid over £100k in 2023/24. I have done a self assessment which has shown that I underpaid tax, which is fair enough. However, I’ve been another pay rise which means I expect to earn £150k this financial year. I updated my HMRC account with my predicted salary as I want to ensure I pay the right amount of tax and know my monthly take home pay. They’ve set my tax code as OT. Is that the correct code?  understand that my allowance is scrapped on my salary and am happy to pay the right tax amount but OT isn’t recognised when I put it into take home pay calculators online. I’m aware I’m very lucky and want to contribute my fair share but is OT the correct code?

Dazed_and_C0nfused

0T (zero T) is the correct code if your Personal Allowance has been tapered down to £0 and you don't have any other tax code allowances or deductions to factor in.

The Personal Allowance being £0 is highly likely to be correct but only you know if there should be any other tax code allowances or deductions or not.  

Things like job related expenses, Gift Aid, pension tax relief (from RAS contributions), company benefits, untaxed interest etc.

Remember a tax code is only ever provisional so although code 0T will help you avoid underpaying tax it cannot guarantee it as many things can change during the year.

For example you might not have any interest now but with higher salary you could earn some later this tax year.  Which, outside of an ISA, will add of your tax liability.

Bookworm105

in the case of a salary of £150k a 0T code is the relevant one to use as it means your tax will be correctly calculated across the 20%, 40%, & 45% bands  from month to month as it is a "cumulative" code