What Is An NT Tax Code No Tax Code

Published / Last Updated on 22/11/2014

Video explains what a HMRC NT (no tax) Tax Code is.  When you get an NT code. What is not covered by an NT code?


“Hello there, this video is to explain what an NT tax code is.  NT?  No tax! An NT tax code, how to get one of those?

Right, if you live overseas, if you are an expatriate, a British expatriate or indeed a foreign expatriate where you have assets or income in the UK, generated in the UK then you may or may not have been given an NT, no tax, tax code from HMRC for your income in the UK.  Right, let's explain how this works.

First things first, you are only likely to be issued and NT tax code if you live in a country which has a reciprocal tax agreement with United Kingdom and in very simplistic terms what that means: if income generated in the UK is not taxed in the UK that it’s [the NT code] only issued on the understanding that you are liable to income tax in the country that you now live in.  So that's point 1.

Some countries do not have reciprocal tax agreements with the UK so you are unlikely to be issued an NT tax code. [Now, excuse me, I always have this little cough when I start talking too much].

Certain types of income in the UK you will not and never be issued and NT tax code. to give you some examples of that: if you’ve got government type pension schemes: the State Pension, Armed Forces pensions, Civil service pensions, Teachers pension schemes because that's really state money,  it is always taxed in the UK.

If you have other types of income e.g. royalties, I don’t know, you write a book or whatever, it might be or you get royalties from a video game that you’ve written or something like that.  That income, whilst it is earned income or if you have other income e.g. annuity income from a private pension scheme or from drawdown pension, if you live in a ‘reciprocal agreement’ country you may be issued an NT tax code, so HMRC will issue and NT tax code to your annuity company or your drawdown company or two when you receive your royalties from.  So no tax will be deducted because the assumption is you will be paying tax on that income in the country that you live in.

Moving on to property income, rental income, rental income is very different.  Rental income from properties: if you own buy to let properties for example in the UK. That is part of a different schedule for income tax with HMRC.  What I’ve talked about already is really the earned income category, schedule E, pension income, royalty income, income from armed forces or teachers’ pension schemes etc. PAYE.  They are taxed under schedule E and if there is a reciprocal agreement for ‘non-state funded’ income then you're likely to get an NT tax code. 

But property income is taxed under a different schedule, so that is potentially subject to income tax in the United Kingdom.  So you will not be issued and NT tax code if you have property income in the UK are what you then have, as a British or a European national, currently you have your usual other personal allowance, that amount of money that so you can earn or receiver as income before you start getting taxed.  So the first band, your personal allowance, you receive no tax and then anything above that it starts to move up 20/40% [tax] etc.

So in simplistic terms, what is an NT tax code?  An NT tax code will be issued by HMRC, obviously if you apply for it, where they will issue a no tax code to certain PAYE schedule E, scheduled income such as private pension income, annuity income royalties, drawdown income but you will not receive an NT tax code for government sponsored pension schemes: Armed Forces, State Pension, Teachers Pension Scheme etc.  Or indeed, if it's a separate schedule i.e. property income, you’ll not be issued an NT tax code for that but you will be subject to income tax in the normal way when you file your tax returns.

So hopefully that gives you an insight into what the NT tax code is and when and if you're likely to be issued one with HMRC.  But quite specifically it will usually be where and if, and only you live in a country that has a reciprocal taxing agreement with the United Kingdom.

Any questions do call me. Thanks very much for watching.”

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