Tax Code D0 Explained

How payroll applies D0

HMRC’s 2026/27 manual tables give one instruction for D0: multiply the whole pay by 0.40. There is no tax-free pay and no 20% slice at all. HMRC’s PAYE Manual says D0 has been allowed on either a cumulative or a week 1 / month 1 basis since April 2010, and HMRC’s systems use week 1 / month 1 for D0 by default.

That default matters if you need a refund. HMRC’s instructions for D0 on a week 1 / month 1 basis tell employers not to make any refunds. On a cumulative basis, payroll works out the tax from total pay and tax since 6 April, so a correction can flow back through your pay.

Worked example: when D0 is right and when it isn’t

D0 is correct when your main job already takes you past the higher-rate threshold of £50,270. With £65,000 from the main job, every pound of a £12,000 second job falls in the 40% band. D0 deducts £4,800, which is exactly right.

Now suppose the main job drops to £48,000 – for example after you go part-time. The first £2,270 of the second job is now basic-rate income. The tax actually due on the second job is £4,346, but D0 still takes £4,800, an overpayment of £454. When income straddles the threshold like this, HMRC’s rule is to code the second job BR and restrict the basic-rate band at the main job.

What HMRC uses to decide on D0

HMRC gives a second job or pension D0 when it estimates that your allowances and basic-rate band are fully used elsewhere. The estimate comes from the pay your employers report in real time and from any figure you’ve given HMRC. HMRC’s manual also says it will code your secondary income in a specific way if you ask, so you can request a split that matches what you actually expect to earn.

• Check the estimated pay HMRC shows for your main job in your personal tax account. If it’s too high, update it.
• If you’ve left the main job, tell HMRC. Otherwise the second job may stay on D0 while nothing is using your allowance.
• If a bonus or pay rise has pushed you over the threshold, D0 may now be correct even though it wasn’t last year.

D0 in Wales and Scotland

In Wales the code is CD0 and still charges 40%, because Welsh rates match England’s. In Scotland the same letters mean something different. SD0 charges the 21% intermediate rate, and the Scottish higher rate of 42% needs SD1. So a Scottish second job coded SD0 isn’t a higher-rate code at all.

Checking a D0 payslip in ten seconds

Because D0 has no allowance and no bands, the check is simple: the Income Tax on that payslip should be exactly 40% of the taxable pay for the period. On £1,000 of taxable pay that is £400. If it’s £200, payroll is running BR. If it’s less than £200, the job has an allowance. Either way the code on the payslip and the code in your personal tax account don’t match, so ask payroll which notice they last applied.

Do the check on the figure your payslip labels as taxable pay, not on your headline salary. HMRC’s tables apply the D0 rate to taxable pay for the period, rounded down to the whole pound.