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HMRC internal manual

PAYE Manual

HM Revenue & Customs
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Coding: codes: how they are used and calculated: cases where you should use code NT

You should use code NT only in cases covered in this subject. This subject is set out as follows

Note: Tax code NT is used for all taxpayers regardless of where they live. Further information for Scottish taxpayers is at PAYE100035

Statutory exemptions

  • If there is doubt whether a payment will constitute pay. The Employment Income (EIM) Manual tells you what constitutes pay. EIM74302 tells you about statutory exemptions for specified wounds and disability pensions

Double Taxation Agreements

  • Visiting teachers, foreign language assistants, students and others exempt under a double taxation agreement. The Double Taxation (DT) Manual explains these cases
  • Where questions arise about residence or payments outside the UK (England, Scotland, Wales and Northern Ireland) see PAYE81640 - PAYE81695
  • Where code NT has been applied, relevant notes should be held regarding a double taxation agreement. If no relevant notes are held, and the country of residence is listed in the Double Taxation Relief Manual you should issue form OCAR32 and B/F for 12 weeks to allow the customer to respond. Where no reply is received, or the reason for NT has ended, remove the NT code

Note: There is no need to issue an OCAR32 letter where the individual’s total income is less than their personal allowance. Make a clear Contact History note of the reason.

Ministers of religion

  • Clergymen and Ministers of religion in certain circumstances. These are explained in the Employment Income (EIM) Manual. The Self Assessment (SA) Manual gives further advice on what expenses should be coded from a Self Assessment return
  • Nuns or monks may deed their worldly goods to their order. These worldly goods may include state pension and company pensions. Where a deed is held, code NT should be issued to the appropriate employment source. Where code NT applies, a clear Contact History note should be held on the PAYE Service record to say why NT coding is appropriate

Note: Where code NT has not previously been issued, ask for a copy of the Deed of Covenant up to April 2000 or a copy of Perpetual Charitable Donation Declaration from April 2000. Any existing NT codes should continue to be operated without the sight of the document.


  • Where an employee continues in the same employment or pensioner remains with the same pension provider and is the subject of a receiving order. Use code NT from the date of bankruptcy to the following 5 April
  • Select Bankruptcy as the reason. This will ensure the NT code isn’t carried forward into CY+1

Note: Remember to give the correct allowances in CY+1.

Certain professions

  • Where a person self assesses on trading or other non-PAYE income and holds a PAYE post as a small part of their main work
  • Where the PAYE Manual instructs you to issue code NT
  • Where the earnings are paid in the course of a trade or profession and are self assessed as profits of the trade or profession. Examples are payments to entertainers and director’s fees received by partnerships and companies. The Employment Income (EIM) Manual tells you what is assessable as PAYE income

Entertainment industry

The seven-day rule

  • Many employees within the TV and Film industry may have short engagements with a succession of different employers, therefore the normal operation of PAYE would result in excessive deductions of income tax. Under the seven-day rule, where an employee is engaged for 6 days or less, employers need not deduct income tax from payments made to these employees. National Insurance will be paid in the usual manner, and FPSs will be received to confirm the National Insurance payments made

Other workers

  • For other categories of workers within the entertainment industry code NT may have been agreed by HMRC, for example, those with Reserved Schedule D status. FPSs will be received to confirm the National Insurance payments made

Note: Where an employment record has been set up for these employments following receipt of form P14 and the linked form P14 shows tax code NT operated, you should

* Issue code NT against the employment if a code other than NT has already been issued incorrectly, see Action guide tax40002
* Do not issue code NT against other employments unless code NT is appropriate

NI Only employments

PAYE may not be applicable to some categories of employees, however National Insurance (NI) contributions may still be payable.

Under RTI, where an employer submits a ‘Full Payment Submission’ (FPS) which shows both ‘Taxable Pay to Date’ and ‘Total Tax to Date’ of nil, but a deduction is shown for NI, the employment record created for the individual will be treated as ‘NI Only’.

The ‘NI Only’ status of the employment record can be identified by the ‘NI Only Employment’ indicator, which is shown on the EMPLOYMENT DETAILS screen. This indicator will be unchecked should the employment become subject to PAYE income tax deductions.

Although a live employment record will be held, the employment will not be included in any ‘manual’ or ‘automatic’ tax code calculated for the individual.

Staff who have been allocated a specific NPS PAYE Service role will have the ability to manually amend this indicator, should they have a business need to do so. See Action guide tax40002.