You open your payslip and… there it is — OT staring back at you where your tax code should be.
Your first thought? “What on earth is OT, and why has my salary taken a hit?”
If that sounds familiar, you’re not alone. Thousands of UK employees and pensioners end up with the OT tax code each year, often without warning. The upside? It’s usually temporary. The downside? Until it’s sorted, you could be paying more tax than necessary.
Here’s how it actually works in everyday life.
What Exactly Is the OT Tax Code?
The OT tax code is basically HMRC’s way of saying: “We don’t have all your tax details yet, so we’re taxing everything.”
Normally, you get a tax-free personal allowance (currently £12,570 for the 2025/26 tax year), meaning you only start paying income tax once you earn above that amount.
With OT, that allowance vanishes — every pound you earn is taxed from the very first £1.
For a detailed breakdown of how tax codes work in general, you can check our list of tax codes and what they mean.
Why You Might Have the OT Tax Code
It’s rarely because you’ve done anything wrong. In most cases, HMRC simply doesn’t have your complete income details yet. Common triggers include:
- Starting a new job without giving your P45.
- Changing jobs mid-tax year before payroll catches up.
- Already using your personal allowance in another job or pension.
- Moving from self-employment to employment and awaiting record updates.
In other words, OT is HMRC’s “safety mode” until they’re sure how much tax you should pay.
How OT Tax Works in Real Life
Let’s put some numbers to it.
Imagine you earn £2,000 in a month:
- With the normal 1257L tax code, you’d only pay tax on what’s above your monthly personal allowance.
- With OT, you’re taxed on the full £2,000.
That means less take-home pay — which is why spotting OT early matters.
Is OT the Same as BR or Emergency Tax?
Not quite.
- BR (Basic Rate) taxes all your income at 20%, no allowance.
- OT taxes all your income at the rate your earnings fall into — 20%, 40%, or even 45% — and still gives you no allowance.
You can read more about why your tax code might change if you’ve noticed something unexpected on your payslip.
How to Fix an OT Tax Code Quickly
- Check what HMRC says
Log into your Personal Tax Account to see the reason for your code. - Give your employer the right info
Got a P45 from your last job? Hand it in. If not, complete HMRC’s Starter Checklist. - Contact HMRC directly
Call 0300 200 3300 or update your details via HMRC’s official service. - Wait for an update
Once corrected, your employer will adjust your next payslip — and you may even get a refund.
For more on the process, here’s our full guide on how to change your tax code.
Claiming a Refund
If OT caused you to overpay, HMRC can return the extra tax:
- During the year – through your employer’s payroll.
- After the tax year ends – as a direct tax rebate from HMRC.
FAQs
Q1: Does the OT tax code mean I’m overpaying tax?
A: Usually, yes. The OT tax code means your UK personal allowance isn’t being applied, so more of your income is being taxed than necessary.
Q2: How long will I be on the OT tax code?
A: It varies. Some employees are only on OT for one payday, while others may remain on it for a few months, depending on how quickly HMRC updates tax records.
Q3: Can I stop the OT tax code before my first payday at a new job?
A: Yes. Provide your P45 from your previous employer or complete HMRC’s Starter Checklist immediately to ensure the correct tax code is applied.
Q4: Is the OT tax code a penalty?
A: No. OT is simply a temporary placeholder tax code used by HMRC until your personal tax details are confirmed. It’s not a fine or penalty.
Conclusion
The OT tax code can dent your pay, but it’s not a reason to panic. It’s simply HMRC’s “better safe than sorry” approach when they’re missing key details.
By checking your Personal Tax Account, handing in the right paperwork, and contacting HMRC promptly, you can often fix OT quickly — and even claim back any extra you’ve paid.
The sooner you act, the sooner your payslip — and your bank balance — will feel normal again.
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