What is an NT tax code?
An NT (no tax) code is granted to individuals who receive UK-sourced income and reside in a country that has a double taxation agreement with the UK.
Two common examples would be the following –
- UK Expat who was previously employed by UK company and paid taxed via the PAYE scheme, continues on a UK payroll whilst leaving in a foreign country. Without applying for NT tax code, the induvial will be taxed in the UK incorrectly and again taxed in foreign country when processing local countries tax return
- UK Expat who wants to withdraw their UK pension, including a SIPP, will pay UK tax on the withdrawal without applying for NT tax code
Therefore, any individual with NT tax code, will not be taxed at source in UK, saving themselves much time and bother trying to request HMRC to refund the tax withheld at source incorrectly.
NT codes should take effect from the departure date to prevent double taxation, so it is imperative that you complete the relevant forms and send them to HMRC prior to employee commencing their assignment.
How do I apply for an NT code?
The most important form to fill out is P85 form, which relates to HMRC that you have left the UK and will be still receiving UK income from employment or pension.
See P85 link below, complete the form and send to HMRC or if you have online HMRC gateway account, you can process the P85 form via your personal account.
However, depending on the country that you have moved to, you may be required to fill in additional forms and HMRC needs to be contacted, HMRC contact number is 0300 200 3300 (calling from UK), 00 44 135 535 9022 calling from overseas.
Also, you can use the following link to HMRC’s website, providing you extra information on countries around the world: https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice
What do I do once I have been granted an NT code?
HMRC will update your employer or pension provider of the tax code change, once they have been notified, there will be no UK tax paid at source.
How Long Does The Process of Filling Up NT Tax Forms Take?
The typical completion time for HMRC is six or eight weeks. However, there are circumstances that it can take much longer, so it is recommended to make this application as early as possible.
Do I still pay National Insurance?
Most NT code situations still have a requirement for National Insurance payments to be paid as usual There are circumstances that individual can be exempt also from NI payments, but this is not the topic of this article.
