What Does The D0x Tax Code Mean?

If you are wondering about the meaning of the D0x tax code or why has it been assigned to you, you will find detailed guidance through the following article which will help you understand how tax codes are assigned and why you’ve been assigned the D0x tax code.

What Does The D0x Tax Code Mean?

The meaning of the D0x tax code can be divided into two parts and explained as follows:

• The first part of the D0x tax code is the main tax code D0. This tax code indicates that your income is being taxed at the higher rate of 40% without the deduction of a tax-free Personal Allowance.
• The second part of this tax code is its extension. Having the letter “x” added to your tax code as an extension indicates that this is an emergency tax code, assigned to a taxpayer on a temporary basis. Emergency tax codes don’t usually last for an entire tax term.

This tax code applies to individuals with multiple sources of income; who have used up their entire Personal Allowance through their primary job or pension income, or whose combined income from more than one job exceed the threshold for the higher rate tax band.

If you’ve been assigned the D0x tax code, it should be mentioned in all of the below-listed documents so that there is no error in documentation or incorrect payment of taxes:

• Payslip
• P45 form
• P60
• PAYE coding notice
• Pension advice slip
• HMRC website

Why Am I Assigned The D0x Tax Code?

The main reason why someone is assigned the D0x tax code is that they have multiple sources of income. This can be due to working two jobs or earning through a job and also having a pension income. 

In this case, your Personal Allowance is deducted from your primary job. This is why there is no consideration for a Personal Allowance for your secondary job which is assigned the D0x tax code.

Since the D0x tax code is an emergency tax code, it is also non-cumulative in nature. This means that it only applies to the time period in question when it appears on your payslip and not the entire tax term. This could be due to any of the following reasons:

• change of jobs during the tax term causing a change in your income
• being unemployed earlier and having recently become employed
• shifting from being self-employed to the PAYE system
• receiving company benefits or State Pension

How Are Tax Codes Assigned?

Tax codes are assigned to taxpayers by following these steps: 

• First, the HMRC calculate your tax allowances. This includes the standard Personal Allowance of £12,570 along with any other allowances and job expenses.
• Then, your deductions are calculated (if they apply to you). This includes untaxed incomes from part-time work or benefits payments.
• At the next step, your deductions are subtracted from the tax allowances resulting in your pre-tax income amount. If your pretax income is equal to or less than £12,570, your income remains tax-free.

Based on this calculation, income tax is deducted according to the following rates:

• Income tax is charged at 0% when income is up to £12,570
• Income tax is charged at 20% when income is between £12,571 and £50,270 
• Income tax is charged at 40% when income is between £50,271 and £150,000 
• Income tax is charged at 45% when income is above £150,001

What Should I Do If I Am Assigned The D0x Tax Code By Mistake?

If you have been assigned the D0x tax code by mistake, you should follow these guidelines to have it corrected:

• Inform your employer of an incorrect tax code assigned to you.
• Contact the HMRC by either calling them at 0300 200 3300 or using the HMRC income tax checker tool online by accessing your Personal Tax Account.  
• Share the details of why you believe you are assigned an incorrect tax code along with supportive evidence.

You will get a confirmation from HMRC once your tax code is corrected. They will also inform your employer or pension provider of your new tax code. You can check that you’ve been assigned the correct tax code when you get your next payslip.

Conclusion:

Being assigned the D0x tax code indicates two things. The first is having to pay income tax at a higher rate, while the second is that there is no consideration for a tax-free Personal Allowance. The D0x tax code is an emergency tax code. This means that it remains applicable only for the time period when it is assigned to a payslip and not the entire tax term.

References:

Understanding your tax code – the ultimate guide

What Does My Tax Code Mean? Tax Codes Explained. – Personal Tax Centre