0T gives you no Personal Allowance at that job, so the first pound you are paid is taxed like any other. Tax is then charged through the rate bands, stepping up as the pay from that job rises. You get 0T when your employer has no details to build a code from, or when your allowance is already used up somewhere else.
What 0T does to your pay
The zero is the point: no tax-free pay. Your employer taxes your first pound exactly as it would tax a pound above your allowance. HMRC's PAYE manual describes 0T as a code that charges tax through the rate bands at the basic rate, the higher rate and any additional rates, depending on what the person earns.
On a salary of £35,000, that costs £2,514.00 more income tax over a year than the standard code. You keep £2,183.84 a month instead of £2,393.34. National Insurance does not move, because it is never worked out from your tax code.
The contrast with an allowance code is easiest to see on a monthly payslip. The standard code hands the payroll £1,048.26 of tax-free pay each month. 0T hands it nothing.
The four reasons you get 0T
Your employer has no details for you. Your P45 is the form your last employer gives you when you leave; the starter checklist is what a new employer asks you to fill in instead. Start a job with neither and there is nothing to build a code from. The PAYE manual lists 0T for a new employee who has ticked none of the starter statements.
Your Personal Allowance has run out. Above £100,000 of adjusted net income the allowance falls by one pound for every £2 over that line. Adjusted net income is not the same as your salary: it is broadly your income from all sources, less pension contributions given relief at source and Gift Aid donations. Once the allowance reaches nothing, 0T is the correct code rather than a mistake.
You have been paid after leaving. HMRC's P9X instructs employers that where a payment is made after a P45 has already been issued, tax is deducted using code 0T, or S0T or C0T if you had that prefix, on a non-cumulative basis. A final commission payment, a late bonus or an unpaid holiday balance often arrives this way.
Your allowance is fully used at another job, and the second employment needs a code that does not give it to you twice.
0T or BR: the difference that matters
Both codes give you no allowance, so they are easy to confuse. They part company on the rates.
BR charges the basic rate on everything from that job and ignores the higher rates. 0T works up through the bands, so a large payment moves into 40% and then 45% exactly as a salary would.
On a small second job the two codes take the same tax. On a redundancy payment, a bonus after leaving or a well-paid second contract, 0T takes considerably more. That difference is the whole reason HMRC keeps both codes.
Why 0T on week 1 or month 1 hits so hard
0T is often issued on a non-cumulative basis, marked W1, M1 or X on the payslip. Your employer then taxes each pay period on its own and cannot hand back tax you overpaid earlier in the year.
Two things stack up: no allowance, and no chance for the payroll to correct itself. That combination is why a single payment after leaving can look as though a large part of it has vanished.
One rule caps it. The PAYE regulations set an overriding limit: the tax deducted from a payment cannot be more than half of that payment. HMRC's employer guide states that this regulatory limit applies to all tax codes, not only K codes. Tax that the limit stops being deducted is not written off; it stays outstanding for HMRC to deal with.
How to get it corrected
Give your new employer your P45, or fill in the starter checklist if you do not have one. If the code stays wrong, check and update your details in HMRC's check your Income Tax service. HMRC then issues a new code.
Where HMRC holds your full income details for the year, your employer refunds the difference through your pay, usually with the new code. If the tax year has already ended, HMRC reconciles it after 5 April and writes to you.
Is 0T an emergency tax code?
Not in HMRC's sense. The emergency code is the standard allowance code operated on a week 1 or month 1 basis, so it still gives you tax-free pay one period at a time. 0T carries no allowance at all. It is frequently issued non-cumulatively too, which is why it feels the same on a payslip and why the overpayment under 0T is the larger one.
Does S0T mean something different?
S0T is the same code for a Scottish taxpayer, so the Scottish rate ladder applies as the pay from that job rises. C0T is the Welsh equivalent. Both prefixes are set from where your main home is rather than where you work, and neither changes the fact that the code gives no allowance.