'OT' Tax Code

JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
Client is non-resident but recieving a UK pension and they're using tax code 'OT'. I've done a bit of digging and it seems to be applied if the pensioner didn't complete P46(PEN), but I can't make sense of the amount of tax that's being deducted - he says that he's currently receiving £834.22 gross, £88.40 tax and £745.82 net. Does anyone know how the £88.40 has been calculated and if completeing form P46(PEN) will sort this problem out now, or do we have to contact HMRC to arrange for the code to be amended?


  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉

    I think you will find that the 0T is probably right in these circumstances but you are also right the calculation makes no sense. 0T usually operates on a W1/M1 basis so £834 a month would attract 20% tax and hence £166. 80. On a weekly basis it would be partly 20% (£673) and the rest 40% and that comes to £199 income tax.

    This is closer to a 10% tax rate which only applies to savings for very low income taxpayers so I think you need to do a lot more digging. Completing a P46(PEN) probably won't make too much difference because the real question is whether the person has any right to the personal allowance and that's a gamble for non residents. If they are then the 0T is completely wrong but if they are to be denied the PA then 0T is spot on.

  • Pete12
    Pete12 Registered Posts: 58 Epic contributor 🐘

    I was under the earlier impression that - in my own case - a former British citizen, who had emigrated to Australia and currently holds both British and Australian citizenship (2 passports) was not allowed a personal allowance (a practising CTA told me this). Subsequently, I was informed the fact that the person does hold British citizenship entitles them to a personal allowance which can be applied to investment income generated in the UK...I'd welcome your opinion on this.

  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    As I understand, it, if you are a Britsh Citizen you get a personal allowance. I am not aware of any exceptions to this, though could always be wrong.
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
    Thanks very much everyone - that's very useful!
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