Tax & Estate Planning

UK Tax Codes for Non-Residents: What They Mean and How to Get Them Corrected

If a UK pension or other income started after you moved abroad, the code applied to it may no longer fit your position. This page explains how UK PAYE tax codes work, why the code applied to a UK pension or income source frequently produces incorrect deductions for people who have moved abroad, and what the process is for correcting it through a regulated specialist. A wrong code means tax over-deducted month after month, or too little deducted and an underpayment to settle later.

Request an introduction

Information only. Nothing on this page constitutes financial, tax, or legal advice. Pharos is an introducer and does not provide advice. A regulated specialist can help you assess your individual position. Read our full disclaimer.

Last reviewed June 2026. Fact-checked against primary sources. How we research this.

In short

A UK tax code tells your employer or pension provider how much Income Tax to deduct. After moving abroad, the code is often wrong, because HMRC's defaults assume UK residence and full allowances. The NT (no tax) code can apply to some pensions under a double-taxation agreement, but it removes withholding, not necessarily the underlying UK tax. Until corrected, the code can leave you over-deducted month after month, or under-deducted and facing a later bill.

What this involves

A UK tax code is a short alphanumeric string that an employer or pension provider uses to calculate how much Income Tax to deduct from each payment under PAYE (Pay As You Earn). HMRC issues the code; the payer applies it automatically. The code encodes two pieces of information: the amount of income that can be received tax-free, represented by the number, and the rate structure that applies to income above that threshold, represented by the letter suffix. When the code is wrong, the payer deducts too much or too little tax, and the individual must then either claim a refund or pay an underpayment. For people who move abroad, the code is frequently set incorrectly because HMRC's default assumptions, including full-year employment, UK residency, and standard allowances, no longer match the individual's actual position.

Tax code: An alphanumeric string issued by HMRC to an employer or pension provider, instructing how much Income Tax to deduct from each payment. The number encodes the tax-free allowance divided by ten; the letter indicates the applicable rate structure. The standard code for 2024-25 and 2025-26 is 1257L, reflecting the standard Personal Allowance of £12,570.
Emergency tax code: A non-cumulative code (typically with the suffix W1 for weekly pay, M1 for monthly pay, or X for irregular pay) applied when HMRC does not hold the information needed to issue a correct code. Tax is calculated on each payment in isolation rather than against cumulative year-to-date income and tax paid. HMRC states it usually updates an emergency code within 35 days once it receives the necessary information.
NT code: A tax code meaning "no tax": the employer or pension provider makes no Income Tax deduction from the payment. Applies in specific circumstances defined in HMRC's PAYE manual, including certain pension payments made to non-residents under a Double Taxation Agreement. An NT code removes the withholding obligation but does not necessarily mean the income is free of all UK tax.
P85: The HMRC form "Get your Income Tax right if you're leaving the UK," used to notify HMRC of departure and claim any Income Tax overpaid on UK employment income in the year of leaving. The P85 also triggers HMRC to update ongoing tax codes for income streams that continue after departure.
Double Taxation Agreement (DTA): A bilateral treaty between the UK and another country that determines which country has the right to tax specific types of income. A DTA can, depending on its terms, exempt UK pension income paid to a non-resident from UK tax at source, forming the basis for an NT code claim.

See the full detail: how this works

The number in a UK tax code represents the individual's tax-free allowance divided by ten. The standard code for 2024-25 and 2025-26 is 1257L: 1257 multiplied by ten equals £12,570, which is the standard Personal Allowance frozen at that level since 2021-22. The letter suffix indicates the rate structure. L means entitled to the standard Personal Allowance. BR means all income is taxed at basic rate (20%) and is typically applied to a second job or pension. D0 means all income at higher rate (40%). D1 means all income at additional rate (45%). K codes arise when income exceeds the Personal Allowance or untaxed income from benefits requires additional deductions. The 0T code means no Personal Allowance and taxes every pound from the first. NT means no tax deduction at all. Emergency codes carry the suffix W1 (weekly), M1 (monthly), or X (irregular dates); under these, tax is worked out on the basis of what is paid in that period only, with no look-back at year-to-date figures.

Emergency codes are triggered when HMRC lacks the information needed to issue a correct code: starting a new job without a P45, beginning receipt of a pension, or starting company benefits for the first time. HMRC states it usually corrects an emergency code within 35 days of a new job or pension starting, once it receives employer Real Time Information (RTI) data. Refunds from emergency code overtaxation flow through the next payroll run after the code is corrected: typically on the next or following pay for monthly employees. After the tax year ends, HMRC conducts a year-end reconciliation and issues refunds directly where payroll has not done so.

The P85 is the primary notification to HMRC that an individual has left or is leaving the UK. It allows a claim for any Income Tax overpaid on UK employment income in the year of departure. The P85 also triggers HMRC to update ongoing tax codes for income streams, such as UK pensions, that continue after departure. It is not required where the individual is already completing a Self Assessment return for the year of departure, as the SA109 supplementary residence pages serve the same purpose. Submission options are online (after leaving the UK) or by post.

The NT code instructs the pension provider to make no Income Tax deduction. For pensioners living abroad, HMRC's PAYE manual (PAYE81750) sets specific conditions: the pension must relate to service that meets certain overseas service criteria, the pensioner must remain non-resident, and a double-taxation agreement must exist between the UK and the country of residence. Critically, PAYE81750 makes explicit that an NT code removes the withholding obligation but the underlying taxability depends on the DTA in force. Where a DTA does not exempt the pension, the pensioner remains liable to UK tax via Self Assessment even though no tax is withheld at source. Applying for an NT code under a DTA requires a DT claim form certified by the tax authority of the country of residence. Some countries (including Spain and Portugal) no longer stamp the DT form directly and instead require a separate Certificate of Residence from the national tax authority.

Most non-UK residents do not automatically receive the UK Personal Allowance. However, British citizens retain the right to the allowance regardless of where they live. EEA nationals also qualify. The allowance must be actively claimed: form R43 (online or by post) for those not already in Self Assessment, or through the Self Assessment return. The allowance tapers for those with income above £100,000, reducing by £1 for every £2 above that threshold and disappearing entirely at £125,140. A regulated tax adviser acts for a client with HMRC after completing agent registration and obtaining client authorisation via form 64-8. Once authorised, an agent can access the client's PAYE record, speak to HMRC on the client's behalf, and request code amendments.

Considerations and trade-offs

Personal Allowance entitlement is not the same for all non-residents. British citizens living abroad retain the right to the UK Personal Allowance; EEA nationals also qualify; nationals of other countries without a relevant DTA provision generally do not. The allowance must be actively claimed in all cases.
The NT code does not automatically mean the pension is free of all UK tax. PAYE81750 is explicit: the NT code removes the withholding obligation, but the underlying taxability depends on the DTA. Where a DTA does not exempt the pension, the pensioner remains liable via Self Assessment. Assuming NT code equals zero liability is a common error.
Double-taxation agreements vary materially in their pension provisions. Some UK DTAs exempt private pensions paid to non-residents from UK tax entirely; others preserve UK taxing rights; some distinguish between government service pensions and private pensions. The relevant DTA text must be reviewed individually.
Emergency coding can persist for multiple payment cycles. HMRC's guidance states emergency codes can take up to 35 days to be corrected. A person who begins receiving a UK pension after moving abroad may sit on an incorrect code for several months, producing cumulative overtaxation.
The Personal Allowance taper affects high-income non-residents. Non-residents who are entitled to the allowance lose it progressively once income exceeds £100,000 and lose it entirely at £125,140. The taper applies on the same basis as for those domiciled in the UK.
The P85 and Self Assessment overlap, and submitting both can cause complications. If an individual has submitted a P85 and is subsequently found to need a Self Assessment return for the same year, HMRC may hold two overlapping claims. A regulated specialist can identify the appropriate route before forms are submitted.

How Pharos can help

1.Is the code on your UK pension or income actually wrong, and which code is correct? Does the NT code apply to your pension under the relevant double-taxation agreement, or are you still liable through Self Assessment? Are you entitled to the UK Personal Allowance as a non-resident, and has an emergency or K code been overtaxing you since the income started? Pharos introduces you to a regulated specialist who works through exactly these questions with people in your position.
2.The introduction takes into account your country of residence, the type and source of UK income you receive, and the complexity of your position, so the specialist already works with the DTA and PAYE rules that apply to you.
3.There is no cost to ask and no obligation. Pharos does not pass your details to anyone without your say-so, does not assess your tax code or position, gives no advice, and does not benefit from any product outcome.
4.Once an introduction is made, the regulated specialist takes on the engagement under their own authorisation. Pharos stays available if your circumstances change or a different specialism is needed.

See how the introduction works.

Request an introduction

Situations where people consider this

Emergency code on a UK pension after moving to Portugal

A retired British national moves to Portugal in the same year she begins drawing a UK occupational pension. Her pension provider, lacking HMRC instruction, applies the emergency code 1257L M1. She is taxed on each monthly payment in isolation, with no credit for the portion of the year she was still UK-resident. She pays several months of excess tax before the code is corrected. Whether a DTA exemption, NT code, or corrected cumulative code is the appropriate resolution depends on her position, the terms of the UK-Portugal DTA as they apply to her specific pension type, and her residency status. A regulated specialist can assess which code is correct and liaise with HMRC using form 64-8 authorisation.

NT code claim under DTA for a pension recipient in Spain

A British national resident in Spain receives a UK private pension. He believes his pension is exempt from UK withholding tax under the UK-Spain DTA. He applies for an NT code. HMRC requires a certified DT claim form. Spain is one of the countries that no longer stamps DT forms directly: a separate Certificate of Residence from the Spanish tax authority (Agencia Tributaria) is required instead. Whether his pension type qualifies under the specific DTA provisions, and whether the underlying service history meets the HMRC criteria set out in PAYE81750, are individual assessments a regulated specialist can conduct and progress with HMRC.

K code producing unexpected additional deductions in the UAE

A British national living in the UAE continues to have a UK company car benefit from a previous employer recorded on a P11D. HMRC includes the benefit value in his tax code, producing a K code, meaning additional tax is deducted from his pension to collect the tax on the benefit. He does not realise the K code is operating. The correct position, including whether he is still subject to UK Income Tax on the benefit given his non-resident status, and whether the code should be revised, depends on his residency status in the relevant tax years and the nature of the benefit. A regulated specialist can review the position and request a code amendment from HMRC.

Whether any of these fits depends on individual circumstances, which a regulated specialist can assess.

Sources

Related guides, services, and tools

Guides

Accessing Your UK Pension While Living AbroadA neutral guide for UK expats on when and how a UK defined contribution pension can be accessed from abroad, covering tax, NT codes, and practical steps.UK Pension Options When You Move or Live AbroadA neutral overview of the four main paths for UK expats with pensions abroad: leaving them, consolidating into a SIPP, transferring to QROPS, or accessing benefits.

Services

UK Self Assessment for Non-Residents: Who Must File and HowWhich UK nationals abroad must still file a Self Assessment return, how SA109 works, the Non-Resident Landlord Scheme, and the 60-day CGT window on UK property.Cross-Border Tax for UK Expats: Residence Testing, Treaty Relief and the 2025 ReformsThe cross-border tax landscape for UK nationals abroad: the Statutory Residence Test, double-taxation treaties, 2025 remittance changes, and specialist input.

Considering your options?

Pharos introduces UK nationals abroad to a regulated specialist. There is no cost to ask and no obligation.

Request an introduction

Good to know

Common questions

What does 1257L mean on my payslip?

The number 1257 means HMRC is allowing £12,570 of income tax-free in the current tax year, which is the standard Personal Allowance frozen at that level since 2021-22. The letter L confirms the holder is entitled to the standard allowance. Each payroll period, the employer deducts Income Tax only on earnings above the pro-rated portion of that allowance.

Will my UK tax code change after I move abroad?

Leaving the UK typically affects the code applied to any continuing UK income, such as a pension or employment. Notifying HMRC via form P85, or through the SA109 residency pages in a Self Assessment return, is the standard mechanism. HMRC may then update the code to reflect non-residency, reduced PAYE obligations, or NT status if a DTA applies. Without notification, HMRC often retains the previous code, which may no longer reflect the correct position.

UK Self Assessment for non-residents

What is an NT code, and will it apply to my UK pension now that I live abroad?

An NT code instructs the pension provider to make no Income Tax deduction. Whether it applies to a UK pension received abroad depends on the service history underlying the pension, the existence of a Double Taxation Agreement between the UK and the country of residence, and whether that DTA exempts the specific type of pension involved. Not all DTAs do. An NT code removes the withholding obligation but does not necessarily mean the income is free of all UK tax.

Do I still get the UK Personal Allowance if I live outside the UK?

It depends on individual circumstances. British citizens retain entitlement to the Personal Allowance regardless of where they live. EEA nationals also qualify. For other nationalities, it depends on whether a relevant DTA provides an entitlement. The allowance is not applied automatically to non-residents: it must be actively claimed via form R43 or through Self Assessment where a return is already required.

I have been put on an emergency tax code since my pension started. How do I get it corrected?

Emergency codes are applied when HMRC lacks the information to issue a correct code. They are typically corrected within 35 days from when pension payments began, once HMRC receives the necessary data. Any overtaxed amounts are refunded through the next payroll run after the code is corrected. If the tax year has ended without correction, HMRC issues refunds directly after year-end reconciliation. A regulated specialist can contact HMRC to verify and progress this process once authorised via form 64-8.

What is the P85 form and when is it needed?

The P85 notifies HMRC that an individual has left or is leaving the UK and allows a claim for any Income Tax overpaid on UK employment income in the year of departure. It also triggers HMRC to update ongoing tax codes for income streams that continue after departure. It is not required where the individual is already completing a Self Assessment return for the year of departure, as the SA109 residency pages serve the same purpose.

Request an introduction