What PAYE code to use for starters or leavers?


With a P45 - use the P45 code

Starters with no P45

  • If have completed a starter checklist apply code produced.
  • If unable to complete a starter checklist apply code OT.


  • Cash based payments use code of OT.
  • Share based payments use OT - see below.
  • Pensionable leavers: the week 1/month 1 code routine is replaced by an OT code.

Leavers in more detail

Employers should use the OT code for all leavers, with exception for:

  • when a P45 has not yet been issued
  • for share based payments
  • when a NT code is in operation

When no P45 issued:

  • Employers should issue a P45 on the last date of employment.
  • It may be impossible to issue a P45 on that day, so there may be a gap between leaving and the final payroll run; if so use the last PAYE code for the final payroll run and then issue the P45.

If Form P45 has been issued:

Regulation 37 PAYE Regulations 2003 applies; use code 0T.

Share based payments

  • Use an OT code once a P45 has been issued unless the employee was on a NT code.
  • When there are a series of payments see HMRC guidance: share based payments

Leavers with a NT code

  • A NT code is given for non-resident employees, if a NT code is in operation do not change this to a OT code for a leaver.

Small print

Income Tax (Pay as You Earn) Regulations 2003 SI 2003/2682

Key changes:

The definition of the emergency code is amended.

  • HMRC will in appropriate circumstances determine that an employer should deduct income tax at the additional rate.
  • The 0T code is to be used instead of the basic rate (BR) code when PAYE income is paid after employment has ceased.
  • The additional tax rate should be applied for higher rate tax payers on PAYE income paid after employment has ceased and which subsequently becomes subject to PAYE.
  • A non-cumulative OT code is used where an employee commences employment without providing a P45 to the employer and where a code has not been issued by HMRC and the employee fails to provide specified information required in a P46 form.
  • Where a pension is paid the employer uses the 0T tax code on the non-cumulative basis. There is a requirement for the pensioner to provide specified information in the Form P46(Pen). The regulation also requires the pension payer to indicate on the form that tax is being deducted using that Code on a non-cumulative basis.

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