What is an OT Tax Code?

The OT tax code states that you can't use any tax-free personal allowance. You could end up paying more income tax if you don't have a tax-free personal allowance. This may be because you have already used up your personal allowance or because your employer doesn't have the correct details to give you a tax code. The standard Personal Allowance in the UK is £12,570, which is the threshold of your income upto which you do not have to pay tax. Although it may seem like a random collection of letters and numbers, your tax code is crucial in determining how much money you have to hand over to HMRC.

HMRC does everything possible to provide the correct tax code. It issues millions of codes every year, so there is room for error. It is your responsibility to inform HMRC if you are on the wrong tax code.

What is an OT Tax Code?

What are the Reasons for Giving the OT Tax Code?

These are the main reasons you might be given the OT tax code:

● You have started a new job. You don't have a p45 form to give your new employer.

● You didn't complete a P46

● Your personal tax-free allowance has been used

● You've just started working for a new employer, and you can't give all the information that your employer should have in order to provide you with a tax code.

How Much Income Tax do I Pay with an OT Tax Code?

The amount you earn will determine the percentage you pay.

If you are a resident of Northern Ireland, Wales, or England then you'll pay:

● 20% on earnings up to £37,700.

● 40% on earnings between £37,701 and £150,000.

● 45% on earnings above £150,000.

If you are a resident of Scotland then you'll pay:

● 19% on earnings up to £2,162.

● 20% on earnings between £2,163 and £13,118.

● 21% on earnings between £13,119 and £31,092.

● 41% on earnings between £31,093 and £150,000.

● 46% on earnings above £150,000.

What's the Difference Between OT and BR Tax Codes?

Both the OT and BR tax codes give you no tax-free personal allowance. The BR tax code taxes your salary at the basic rate (20% if you earn less than £37,700). The OT tax code, on the other hand, taxes you at the basic (20%) or higher (40%) rates and additional tax rates (45%).

Note: If your income is less than £37,700, and you pay only the basic rate of tax, then there are no differences between the BR and OT tax codes.

What Happens If You Don't Pay Enough Tax?

HMRC will recalculate your tax if they discover that you have underpaid tax for any reason. If you owe more than £3,000, they will also send you a letter.

How Do I Change My Tax Code?

It is possible to correct an error in your tax code if you find out. It is possible to correct the error online, by phone or through an accountant.

Online Method

You will need to have an account to access the HMRC website. This will allow you to check and update your tax code, notify HMRC of any changes to your tax code, and receive an estimate of the tax you'll be paying for the tax year.

By Using Your Phone

You can change your tax code by calling the HMRC at 0300 200 3300. They are available Monday through Friday, from 8:00 am to 09:00 pm. When you call, make sure you have your National Insurance Number.

Consult a Tax Accountant

This route has the advantage that your tax accountant can ensure that you are tax-compliant and have not paid too much tax. They can also help you get a tax return quickly and efficiently.

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