What Does A D0 Tax Code Mean For An Employee In The UK?

In the UK, tax codes play a vital role in determining how much Income Tax is deducted from an employee’s salary through the Pay As You Earn (PAYE) system. HMRC assigns or issues these codes, and the employers use them to calculate the amount of tax to deduct from an employee’s pay before it reaches their bank account. There are different tax codes in the UK, each with a different and significant purpose. One of them is the D0 tax code. Hence, this guide explains what does a d0 tax code mean, including its significance, and how it impacts an employee’s take-home pay. 

 

What Is A Tax Code In The UK?

A tax code is usually made up of numbers and letters (e.g., 1257L, BR, D0) and is assigned by HMRC based on an individual’s tax-free personal allowance and their employment circumstances. For instance, for the current tax year of 2025/26, most individuals are entitled to a personal allowance of £12,570, which is reflected in the standard tax code 1257L. Nevertheless, it is not uncommon or unheard of for an employee to have multiple sources of income. In such circumstances, where an individual has more than one job or pension, HMRC may assign them a different code, such as D0. 

Whether you can read a detailed Blog on 1257L Tax code:

• What is 1257L Tax Code?

What Does A D0 Tax Code Mean?

The D0 tax code means that all of an employee’s income from that job or source is taxed at the higher rate of 40%, with no tax-free personal allowance applied. Principally,  the D0 tax code applies to people who:

• Have more than one job or pension, and
• Have already used their full personal allowance on their main source of income.

HMRC issues the D0 tax code when you have more than one source of income and have exhausted your tax-free personal allowance on one of them. Consider the case when you are working two jobs or earning a pension while still employed.

Now, instead of splitting your personal allowance between your two jobs, HMRC will apply it to the main job and tax the second income fully at a flat rate of 40%.

For greater clarity, you are issued standard tax code 1257L in your primary job, which gives you a tax-free allowance on the first £12,570 of your earnings. Notably,  the earnings you make from this job are high enough to push you into the higher income tax bracket. Now, for your secondary job, HMRC will apply the D0 tax code. Consequently, your entire income from this job is taxed at the higher rate of 40%, often referred to as the premium rate.

You will understand it better with the following example:

Consider an employee who earns £35,000 from Job A, where the tax code 1257L is applied. In addition to their first job, they earn £25,000 from Job B. Essentially, the second job may be given the D0 code, and all earnings from Job B would be taxed at 40%, since HMRC would assume the person’s total income exceeds the higher-rate threshold, which is currently set at £50,270 for the 2025/26 tax year.

You can learn more about the income tax rates and thresholds by visiting the government website.

Furthermore, it is worth highlighting here for the employees that HMRC does not apply the D0 tax code as a penalty or an indication of fiscal misconduct. Rather, it is simply a method for applying a higher tax rate to one of your income sources, mostly because your tax-free allowance and basic rate band have already been used up elsewhere.

How Does The D0 Code Impact Your Earnings?

Whether D0 have any impact on your take-home pay is a substantial aspect of learning what does a D0 tax code mean. To put things into perspective, let us consider another scenario to see the impact the D0 has on your income. 

Your main job is a full-time arrangement, and it uses up your personal allowance. Aside from that, you have a side hustle, which is a part-time setup. 

Now, as the D0 tax code is applied to your part-time job, every penny you earn from there will be taxed at 40%. 

What do you think the result will be?

Well, you already know the answer. 

Your earnings from your secondary job will be significantly lower than expected. 

Hence,  it is immensely important for you to be mindful of how the D0 tax code can affect your overall earnings since it can dramatically change your entire financial picture. 

Can I Change The D0 Tax Code?

Yes, if an employee believes the D0 tax code is incorrectly applied to their income or no longer relevant, they should contact HMRC directly to request a review. Notably, HMRC can issue a revised tax code if:

• Employment circumstances change,
• The second job becomes the main income source,
• The employee has stopped working at one job, or
• A self-assessment tax return shows that incorrect tax was paid.

Aside from that, employees can also manage their tax codes through their Personal Tax Account on HMRC’s website, where they can report changes in employment or income.

 

Conclusion:

Understanding your tax code is crucial to ensure you pay the right amount of tax. Similarly, knowing what does a D0 tax code mean is equally significant, as it specifically indicates that your income from a particular job is taxed entirely at the higher 40% rate, with no allowance applied. The D0 tax code often affects individuals with multiple sources of income and helps HMRC simplify tax collection. On the contrary, if it is misapplied, it can lead to overpayments or underpayments. Hence, it will be a rational move to seek professional help in this regard. The payroll experts at Payrollservices.accountants can make the tax codes and payroll processing straightforward and uncomplicated. Whether you are an employer looking to assign the correct tax codes or an employee needing clarification on your payslip deductions, our payroll experts can ensure swift, accurate, and compliant payroll processing. With up-to-date knowledge of HMRC’s 2025/26 regulations, we can resolve your tax code issues efficiently and satisfactorily to relieve the employers of the stress and to ensure a cordial employer-employee relationship.