How to Apply for Your NT Tax Code in 2024

Jun 21, 2024 | Advice, Jake Barber, Tax, UK

How to Apply for Your NT Tax Code in 2024

Jun 21, 2024 | Advice, Jake Barber, Tax, UK

A Step-by-Step Guide

Within a UK pension, including a SIPP, your gross pension is subject to PAYE income tax unless you personally apply to HM Revenue & Customs (HMRC) for exemption on the grounds that you are non‐resident. Should you wish to apply for an exemption, please contact HMRC for advice at the telephone number listed below. They will be able to confirm the correct form(s) you need to complete for your specific country of residence or go to the following link: https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice

If exemption is granted, HMRC should provide your pension trustee with the appropriate written authorisation to amend your tax coding, although we will strongly advise to double check this with HMRC directly before making a future withdrawal if you wish to receive the income gross of UK income tax. Thereafter your pension payments will be made without deduction of UK income tax. You must have received an income payment from your pension first to register you to HMRC as being on our Payroll which SJB Global are able to help with.

Your pension trustee can therefore pay a nominal payment to you to register you as being on your pension scheme’s payroll and then make future payment(s) to you on receipt of the applicable tax code being received from HMRC. The first income payment under Flexi‐Access under PAYE rules is taxed on a 0T month 1 tax code, also known as the emergency tax rate.

Until the NT code is received by your pension scheme from HMRC, it is prudent to limit any drawdown income to £1k maximum to avoid any income tax being deducted as they will most likely be under a 1250L Mth 1 code which entitles you to 1/12 of the UK personal allowance (£12,570 in 2023). Please note, that it is not unusual for completion of the exemption procedure to take months. If you are receiving other UK-sourced income, this might put you into a higher tax code.

Any overpayment of income tax, however, should be refunded to you in one of the following ways:

  • through the payroll (subject to receipt of HMRC authorisation within the same UK tax year as the tax has been deducted); or
  • directly to you by HMRC (contact details listed below)

Any queries regarding the calculation of your tax code should be addressed to:

Telephone number: 0300 200 3300
Telephone number (Overseas): 00 44 135 535 9022

Pay As You Earn and Self-Assessment
HM Revenue & Customs
BX9 1AS
UK

Stage 1 – Taking an income withdrawal

The first stage is taking a small withdrawal via income to trigger a tax code, if you don’t have a P60 within 12 months (this would only be applicable if you were working in the UK).

Once the income has been taken, you can ask the UK pension scheme where you took the withdrawal form for the below information:

 

 

 

 

 

Without this information, you won’t be able to complete stage 2.

Stage 2 – Filling in the “country-specific” or “Form DT Individual” & P85 form

Here is a link to the UK Gov website: https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice

If there is a form in your country of residence, please use the country-specific form. If not, please click on the standard claim form.

Please don’t forget that once you have filled the form in (following the instructions under the notes section that is either on the form or on a separate attachment), you need to send the form to your local tax authorities in your country of residence to complete the part of the form which is highlighted below:

 

 

 

 

 

 

 

Please also complete the P85 form which you can find here: https://www.gov.uk/guidance/get-your-income-tax-right-if-youre-leaving-the-uk-p85

If withdrawal exceeds GBP 100,000 in the tax year

If the withdrawal exceeds GBP 100,000 in the tax year, you need to fill in a self-assessment form instead of applying for an NT tax code. Once you have registered for self-assessment you will receive a Unique Taxpayer Reference Number (UTR) which you will need for the below forms:

  1. Register for self-assessment: https://www.gov.uk/register-for-self-assessment/not-self-employed
  2. Complete SA100 either online or request paper format: https://www.gov.uk/self-assessment-tax-return-forms
  3. Complete the supplementary pages, SA109 (non-UK residents): https://www.gov.uk/government/publications/self-assessment-residence-remittance-basis-etc-sa109
  4. Complete the HS304 claim form to supplement the SA109 form: https://www.gov.uk/government/publications/non-residents-relief-under-double-taxation-agreements-hs304-self-assessment-helpsheet

Written by: Jake Barber – Principal / Independent Financial Adviser

SJB Global / Blacktower are not tax experts and due to the complexities of the tax system and your aims and objectives it is highly advisable that you seek an independent tax opinion. You are fully aware that SJB Global / Blacktower are not Tax Advisers and as such cannot be held responsible should the applicable tax authority raise a claim against you for any future taxes.  This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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