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Understanding what the 500 0T tax code means and how to fix it

July 2024

Reviewed by RIFT's Quality and Service Manager, Edward Waine ATT

A tax code is a string of letters and numbers that tells your employer how your earnings should be taxed. You’ll have one for each job you have and it’s important that you keep track of them. The standard code you’ll often see is the 1257L tax code.

The 500T tax code is a temporary, non-cumulative code that HM Revenue & Customs (HMRC) uses when they don’t have enough information. Non cumulative means that it will only use your taxable earnings in the current pay period. It will ignore any earnings and tax paid earlier.

Let’s take a closer look at the 500T tax code and give you some helpful tips on how you can fix it.

What does the 500T tax code mean?

The 500T tax code can be confusing. It’s used by HMRC in specific instances, and as it’s temporary it’s different from standard tax codes.

It means that HMRC doesn't have enough information to assign you your correct code. It stays in place until they have the relevant information to determine how much tax-free personal allowance you’re entitled to. The ‘T’ signifies items in your tax affairs that need regularly reviewing.

The 500T tax code can be used if you’ve started a new job, have multiple sources of income or sometimes as an emergency tax code.

How the 500T tax code affects you

Income tax calculation

Under the 500T code, your income tax is calculated on a non-cumulative basis. Each pay period is treated separately, with no consideration of previous earnings and tax.

Potential for over or underpayment

Because it’s a temporary, non-cumulative code, you could end up either paying too much or, in some cases, not enough. Fixing the situation quickly is the best way to avoid any unwanted surprises later on.

Common issues with the 500T tax code

The 500T tax code can be confusing. Common issues with this code often stem from misunderstandings. You may find yourself facing unexpected tax deductions and baffled by multiple income streams.

Here are some reasons why you might have a 500T tax code:

New employment

If you’ve recently started a new job, your employer may not have enough information to determine your correct tax code.

Multiple income streams

If you’re earning money from several sources, or your tax situation is more complicated, the 500T tax code is often used as a placeholder.

Emergency tax code

When HMRC needs more information to determine the correct code, 500T can be used as an emergency tax code.

Knowing why you have this code can help you avoid a tax headache. And fixing it is important so you don’t pay more or less tax than you owe.

How to fix issues with the 500T tax code

Start by checking your tax code on your payslip or HMRC’s online portal. If something looks off, contact HMRC to get it fixed as soon as possible. The easiest way is to just give them a call on 0300 200 3300.

Updating your information is another important step towards fixing your 500T tax code issue.

Tips for updating your info:

Log in to your personal tax account on the HMRC website
Update any changes in your jobs, pensions or personal details
If unsure, call HMRC for help

Keeping your information up to date helps to ensure you’re on the right tax code, avoiding nasty surprises and keeping your finances in check.

Think you might be owed a tax refund?

The average tax refund stands at £3,000*. If you think you’ve been paying too much tax, we can help you get it back. It takes no time at all to find out what you’re owed. Use our tax rebate calculator to see how much you could be missing out on.

RIFT's Quality and Service Manager, Edward Waine ATT, answers your 500T tax code FAQs:

Is 500T an emergency tax code?

The 500T tax code can act as an emergency code. It is a temporary placeholder until the necessary data is gathered that will allow HMRC to calculate your correct tax code.

*£3,000 is based on an average RIFT 4-year claim. Claims can only be made from the last 4 tax years. You can contact HMRC for free tax refund requests and information. Typically, customers will pay 36% in fees (VAT is included). Exclusions apply. To view our fees click here.

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Understanding what the 500 0T tax code means and how to fix it​