If you are a UK tax resident receiving a pension, your provider normally deducts income tax under PAYE before paying you. When you move abroad and become non-resident, that tax deduction is often no longer correct. The NT tax code tells your pension provider to pay you without deducting UK tax, because the taxing rights have moved to your new country of residence.
This article explains when an NT code is appropriate, how to apply for one, and what to watch out for.
What is an NT tax code?
NT stands for "no tax". An NT tax code is issued by HMRC and given to your UK pension provider so they stop deducting UK income tax from your pension payments. It does not mean the pension is tax-free. It means the tax is due in your country of residence instead, under the relevant double-taxation treaty.
Without an NT code, your provider may continue to deduct UK tax at source, leaving you to reclaim it from HMRC. That reclaim process is slow and inconvenient, and many people simply leave money in HMRC's hands for months or years.
Who can get an NT tax code?
You can usually apply for an NT code if:
- You have moved abroad and are tax resident in another country.
- You are receiving a UK pension, annuity, or other regular UK income.
- The double-taxation treaty between the UK and your new country gives that country the right to tax the income.
If you remain UK tax resident, an NT code is not appropriate. Similarly, some types of UK government service pensions remain taxable in the UK even for non-residents, so an NT code may not apply.
How do you apply?
The process is handled by HMRC using a form known as the DT Individual form. The exact form depends on the country you have moved to. You complete the relevant section, and the tax authority in your country of residence confirms your residency status. Once HMRC is satisfied, it issues the NT code to your UK pension provider.
You can apply before you start receiving pension income, or after. If tax has already been deducted, you can reclaim it through the same treaty process, though this may take some time.
What income can an NT code cover?
NT codes are most commonly used for UK private and workplace pensions. They can also apply to some annuities and other regular UK income streams. They do not normally apply to UK government service pensions, which usually stay taxable in the UK, or to income that is specifically taxed at source under the treaty.
If you have multiple UK pensions, each provider needs the NT code. HMRC issues the code, but you are responsible for making sure each provider has it and is applying it.
What happens if you do not get one?
Your pension provider will usually deduct emergency or basic-rate tax from your payments. You then have to complete a UK tax return or claim a repayment to recover what was overpaid. Many providers do not have good processes for overseas residents, so getting the right code in place before payments start saves a lot of hassle.
In some cases, tax can end up being deducted in the UK and then taxed again in your country of residence, with a reclaim needed in one or both jurisdictions. This is the exact scenario the NT code is designed to prevent.
NT code and lump sums
Lump sums are treated differently from regular income under most double-taxation treaties. A tax-free lump sum under UK rules is not automatically tax-free in your country of residence, and the timing and structure of any withdrawal can change the outcome. The NT code applies to ongoing income, not usually to one-off lump sums.
Common mistakes
- Applying for the wrong treaty form.
- Failing to update your pension provider once the code is issued.
- Assuming the NT code means no tax is due anywhere.
- Not checking whether your pension is a government service pension excluded from the treaty.
Getting help
We help Swiss Nationals, and British and European expats get the right tax code in place before pension payments start, and we coordinate the pension income plan with the tax treatment in the country where they live. The NT code is one practical step in a much wider cross-border retirement plan.
You can also download our practical guide to the NT tax code from the resources page.
