BR and 0T tax codes: what the difference means for your pay

A BR tax code means you get no tax-free Personal Allowance on that income, and everything you earn from that job is taxed at 20%, the basic rate. A 0T code also gives you no tax-free allowance, but it applies every band: basic, higher and additional rates, so the more you earn the more of it is taxed at 40% or 45%¹.

The practical difference is what happens as your pay rises. On BR, the rate stays at 20% however much you earn in that job. On 0T, the rate climbs with your income, so a second job or a pension taxed under 0T can push you into higher rates on that income alone. Both codes are usually a sign that HMRC has not set your allowance against that particular income, often because another job or pension has already used it.

Neither code is a punishment and neither is permanent. They are instructions to an employer or pension provider about how much tax to take, and HMRC can change them once it has the full picture of your income. This page explains what each code does to your pay, why HMRC issues them, who can change them, and how to get a wrong one corrected and any overpaid tax refunded.

BR taxes everything at basic rate, with no tax-free allowance

A BR code tells your employer to tax every pound of that income at the basic rate of Income Tax, which is 20%, with no Personal Allowance set against it¹. The code is most often used where you have additional sources of income that have already used up your tax-free allowance, for example a second job or a pension¹. If you see BR on your payslip, it means all your wages from that job are being taxed at the basic rate².

The basic rate itself is set in law: Income Tax on an individual's income up to the basic rate limit is charged at the basic rate⁴. The rates that apply to earnings are 20%, 40% and 45% at the basic, higher and additional rates respectively⁵. BR only ever applies the first of those three.

What this means in practice is that a BR code is not necessarily wrong. If you have two jobs and your allowance is set against the first one, the second job being taxed at 20% from the first pound can produce the right total tax for the year. The code becomes a problem when the allowance is not being used anywhere, or when it is being used twice, because then the total taken across your jobs does not match what you actually owe.

0T gives no tax-free allowance and applies every band

A 0T code also takes no Personal Allowance into account, but instead of stopping at 20% it charges tax according to the basic rate, higher rate and additional rates¹. So the first slice of that income is taxed at 20%, and anything above the basic rate limit is taxed at 40%, with the additional rate applying above the higher limit⁵.

That makes 0T the more expensive of the two codes for anyone whose income from that source is substantial. It is typically applied where earnings exceed the basic rate tax band, or where an employer has not given HMRC the details it needs¹. In other words, 0T often appears when HMRC knows there is income but does not yet know enough about your overall position to give you an allowance.

The two codes are sometimes confused with emergency codes, which are a separate thing. An emergency code is one that ends in W1, M1 or X, and it taxes each pay period on its own rather than cumulatively across the year². You can be on 0T without being on an emergency code, and you can be on an emergency code that is not 0T.

BR or 0T: how each one changes your take-home pay

The difference shows up most clearly as income from that job grows. Under BR, the deduction from that income stays at 20% no matter how much you earn there. Under 0T, the deduction steps up as the income crosses into higher bands, so the same gross pay can leave you with less under 0T than under BR once you are past the basic rate limit¹.

That does not automatically make BR the better outcome. If your allowance is genuinely being used elsewhere, BR on a second income can produce the correct total. If it is not being used anywhere, BR can leave you paying too much across the year, which is recoverable but only once HMRC has the full picture.

It also matters which part of the UK you pay tax in. Scotland has its own Income Tax rates and bands, and if you move to or from Scotland you need to tell HMRC, because you may pay tax at the wrong rate if you do not⁶. A code that produces the right result for someone elsewhere in the UK may not produce the right result for a Scottish taxpayer, and the same applies in reverse.

Why HMRC gives you BR or 0T instead of a normal code

Most codes carry a number that represents your tax-free allowance. BR and 0T carry none, and HMRC issues them when it cannot or should not set an allowance against that particular income. The most common reason is that the allowance is already being used somewhere else, such as a main job or a pension¹.

The second reason is information. If HMRC does not have accurate information about your income, you may be issued with an incorrect tax code⁷. That can happen when you start a new job and the details of your previous employment have not caught up, or when HMRC is working from an estimate. For savings interest, for example, HMRC adds an estimated amount to your tax code for the current tax year based on what your bank or building society reported for the previous year⁸.

A third reason is that HMRC is collecting something through your code rather than issuing a separate bill. It can collect tax you owe from the previous tax year through your code⁸, and where a P800 calculation shows you owe tax, HMRC will usually change your tax code for the following year so it can collect the money that way⁹. Codes can also be used to collect other amounts, and the rules allow an individual to object to a tax code adjustment by contacting HMRC or by making a formal objection under regulation 18 of the PAYE Regulations¹⁰.

Only HMRC can change your tax code

Your employer or pension provider cannot set or alter your code. HMRC tells your employer or pension provider if your tax code changes¹¹, and in most cases, if your tax code changes, there is nothing for you to do, because the PAYE system works out the new tax². Payroll simply applies what it is sent.

That means the route to a correction runs through HMRC. You can use HMRC's online Income Tax checker, or call 0300 200 3300¹. It is important to keep HMRC informed of changes that may affect your tax position so that it can adjust your code⁷, and HMRC may update your code part way through the year if it is told about a change in your circumstances⁷.

There is one piece of paperwork that sits with you rather than HMRC: when you start a job, you give your employer your P45, or if you do not have one, your employer will ask you to fill in a starter checklist¹. Getting that right at the start is what prevents a code being set on incomplete information. If HMRC does not get your income details in time, or you decide not to share that information with your new employer, you may be put on a temporary emergency tax code¹¹.

You can also choose to receive updates about changes to your tax code by email or as an online message in your HMRC account or the HMRC app¹¹, which is a way of noticing a change without waiting for a payslip.

Tax codes often change at the start of each tax year

A tax year runs from 6 April in one year to 5 April in the next¹², and codes are reviewed around that boundary. But changes are not confined to April. A code can move when something happens in your life, such as starting a new job, getting a pay rise or a company car, extra income from workplace or private pensions, interest on savings, or changes to work benefits like company healthcare².

Some of those triggers are easy to miss. Interest on savings is a common one, because HMRC builds an estimate into your code based on what your bank reported for the previous year⁸. A pay rise can push income past a band boundary and change what the code should be. A new company car changes the value of a benefit that has to be taxed.

Where HMRC is collecting an underpayment, it can start to collect through your tax code in the current tax year, and the amounts collected are spread equally across the available months in any given tax year¹³. That spreading is why a code change can feel like a small, steady reduction rather than a single hit.

Getting a wrong tax code corrected and tax refunded

Start by checking the code itself. You can check it online on GOV.UK or on the HMRC app², and the app also shows your National Insurance number and employment history¹⁴. Your payslip carries it too, generally near your National Insurance number¹. If you think the tax is wrong, your tax code may be incorrect¹⁵.

If it is wrong, contact HMRC. You can use HMRC's online Income Tax checker, or call 0300 200 3300¹. Once HMRC has all the information it needs to set you on the right code, you will be refunded any tax that you have overpaid². If an emergency code has meant you paid too much, HMRC will send you a tax rebate¹. Emergency codes are temporary and switch to the right code as soon as HMRC has all the right tax information¹⁴.

There is a timing point worth knowing. HMRC calculates everyone's Income Tax between June and November¹⁶, so a correction for a past year may not land immediately. If you want to check what you paid in a previous year, there is a separate service for that, and a different way to check how much Income Tax you are paying in the current tax year¹⁶.

If you are on a low income or need help understanding your code, TaxAid and other free advice services can help, and MoneyHelper offers free, impartial guidance on tax and money matters. Neither charges for the help.