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Understand common UK tax words, HMRC forms, tax codes and abbreviations. Every definition is written in plain English and reviewed by RIFT’s tax specialists.
This form allows our team to talk to HMRC on your behalf. Without this form they will not speak to us, this is to protect you from fraud. Not having this form from you is the biggest single cause of delay with people receiving their refund cheque. If you need a new copy of the form you can download it from the site or get in touch and we can post you one out.
A company or person you have appointed to deal with HMRC on your behalf. For us to be your agent we need you sign and return 2 copies of the HMRC form called Authorising your agent.
The maximum amount you can claim for business travel under HMRC rules. If your employer does pay the full amount or does not reimburse you at all for work related travel you may be able to claim a tax refund.
Free HMRC mileage calculator: Use our free mileage claim calculator to kick off your travel tax refund with RIFT.
Mileage calculatorWhen tax is taken out of your income before you are paid. This usually applies to PAYE (employed) or Self-Employed people who work under CIS (the Construction Industry Scheme).
A legal status imposed by a court if you can’t repay your debts.
This is currently 20% and is the amount deducted from your salary after you have earned over the Personal Allowance. Read more about allowances and tax codes.
Your employer may provide you with certain benefits e.g. medical cover, car allowance, interest-free loans and job expenses, which will affect your Personal Allowance.
If you've got a BR tax code, it means you're being taxed at the basic rate of income tax (20%) on all of your income from this job, without the benefit of a tax-free personal allowance.
Check your tax code! Your tax code is an important piece of information whenever you’re dealing with HMRC. Use our guide to learn more about what it means.
HMRC Tax Codes ExplainedThe Construction Industry Scheme sets out how self-employed workers are paid by contractors. Tax is normally deducted by the contractor you work for and paid to HMRC on your behalf, usually at 20%.
Card showing details of your registration in the Construction Industry Scheme. The CSCS card is a different card and shows your skills and qualifications.
A cumulative tax code that uses your total pay and tax from the start of the tax year each time you are paid. This allows PAYE to correct small overpayments or underpayments as the year progresses.
A D0 tax code means you're being taxed at the higher rate of income tax (40%) on all of your income from this job, without the benefit of a tax-free Personal Allowance.
A D1 tax code is where all income from that job or pension is taxed at the additional rate without applying any Personal Allowance. For taxpayers in England, Wales and Northern Ireland, this is normally 45%.
If you are employed (PAYE) these could include travel expenses, meals or lodging. Self-employed people can claim for all expenses caused by their job.
HMRC sometimes ask questions to check you are entitled to your tax refund. We will deal with this on your behalf under the RIFT Guarantee.
It can be worrying if you get a letter about an HMRC enquiry, but just get in touch with us and we will get it all sorted out for you.
Employment Support Allowance: a state benefit paid if you are unable to work, usually due to illness.
Flat rate expenses, are a kind of tax relief for employees based on your work-related expenses. They are called “flat rate" expenses because you claim a flat rate of tax relief set by the government instead of the individual costs.
The Flat Rate Expenses scheme makes it easy to claim tax relief if you’ve had to use your own money for travel, clothing, tools or other things that you must buy for your job.
The amount you earn before any deductions (e.g. tax, National Insurance) are made.
🖩 Free income tax calculator: Working out your tax shouldn’t feel like guesswork. Whether you're on PAYE, self-employed or juggling both, our self-employed tax calculator shows you exactly what you’re likely to owe, and it does it fast.
Income tax calculatorHis Majesty's Revenue and Customs - the government department that deals with tax.
The top income tax band, currently 40%.
How much income tax you pay in each tax year depends on:
Jobseeker's Allowance: A state benefit paid by the Department of Work and Pensions if you are unemployed, but available for and actively seeking work.
A K tax code is used when taxable benefits, untaxed income or tax owed are worth more than your available allowances. It increases the amount of income treated as taxable, although an employer cannot take more than half of your pre-tax pay through a K code.
An M1 tax code is when HMRC wants your Income Tax calculated using only your pay and allowances for the current month. Earlier earnings and tax paid in the same tax year are not taken into account, so it is often used temporarily when HMRC does not yet have your full pay details.
The income you receive after any deductions (e.g. tax, National Insurance) are made.
You pay National Insurance contributions to qualify for certain benefits including the state pension. You need a National Insurance number before you can start paying National Insurance contributions. There are different types of National Insurance (known as ‘classes’). The type you pay depends on your employment status and how much you earn, and whether you have any gaps in your National Insurance record. If you’re employed, you stop paying Class 1 National Insurance when you reach the state pension age.
If you’re self-employed you stop paying:
Your national insurance number makes sure your National Insurance contributions and tax are recorded against your name.
NT tax code means no Income Tax should be deducted from that particular source of income. It is only used in specific circumstances and does not automatically mean that all of your income is tax-free.
An N tax code shows that you have transferred part of your Personal Allowance to your spouse or civil partner through Marriage Allowance. Your partner's code will normally end in M because they are receiving the transferred allowance.
A non cumulative tax code that calculates tax separately for each weekly or monthly pay period. It does not consider what you earned or how much tax you paid earlier in the tax year and is often shown by W1, M1 or X.
HMRC form, also called an Expenses and Benefits form, that lists any taxable benefits you receive from your employer e.g. medical cover, company vehicle. You’d receive this from your employer.
HMRC form that your employer gives you when you leave employment stating how much you have earned and how much tax you have paid in the current tax year. Read our P45 guide here.
HMRC form, also called an End of Year Certificate, that shows your total earnings and tax paid in one tax year. You should receive one of these forms from your employer every year. Read about P60's here.
A P800 tax calculation is the form HMRC uses to tell you you've either paid too much tax or not enough.
A P87 HMRC form employees can use to claim tax relief for allowable job expenses, such as professional fees, mileage, uniforms or working from home. It is generally used for employment-expense claims of £2,500 or less for a tax year.
A P55 HMRC repayment form used to reclaim overpaid Income Tax after taking part of a pension pot flexibly without emptying it. It applies where you will not take regular payments before the tax year ends and the pension provider cannot issue the refund.
Stands for Pay As You Earn. It’s the normal tax scheme for employees where your employer deducts tax and National Insurance from your wages before paying you.
The amount you can earn each year without paying tax.
This form allows us to apply for your Unique Taxpayer Reference (UTR) number. An SA1 form is a document that registers a person for self assessment tax returns. It's used by people who aren't self-employed, but need to register for other reasons.
Read more about the SA1 form and registering for self assessment.
A letter from HMRC letting you know if you have overpaid or underpaid tax.
Self Assessment is a system HMRC uses to collect Income Tax in the UK. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a self assessment tax return.
Details of any tax returns you’ve filled in, or which have been completed on your behalf, held by HMRC.
A self assessment tax return is how people report certain types of income to HMRC so that they can work out the tax due.
A common misconception is that it is just for self employed people. Even you are employed and paying tax at source (PAYE) there are other circumstances under which you may need to file a self assessment tax return. Failing to do means a hefty fine from HMRC and they do not accept "not knowing you had to do it" as a valid excuse.
If you start working for yourself, you’re classed as a sole trader (self employed) - even if you haven’t yet told HMRC. You must register and follow the rules for self-employed tax and National Insurance.
Sole traders and partners are classed as self-employed by HM Revenue and Customs (HMRC). This includes selling goods or services (‘trading’), unless you’re just selling a few unwanted items occasionally. If you are self employed you will need to register and complete a self assessment tax return.
Need to file a tax return? We do all the paperwork for your annual returns. There are no deadline worries, no costly mistakes or misunderstandings and no missed opportunities. Our fixed-rate prices start at just £95+VAT.
Tax ReturnsSomeone who does construction work for a contractor (but is not an employee of the contractor).
Being classified as a subcontractor in the Construction Industry Scheme (CIS) means you'll have tax deducted from your earnings.
A T tax code means HMRC needs to use other calculations or review information before confirming your tax position. It can be used where your allowances are adjusted, split between income sources or affected by more complicated circumstances.
A tax refund is the money that you get back from HRMC if you paid too much in tax. By law, if you're travelling to temporary workplaces and paying to make your own way there, you could get a tax refund. On average, a 4-year tax refund claimed through RIFT amounts to £3,000.
The tax year starts on 6th April every year and ends on 5th April the following year. See our calendar of important deadlines for individuals and businesses.
A UTR (Unique Taxpayer Reference) number is a 10 digit number that is unique to either you or your company. It identifies you personally with HMRC for all things related to your personal tax obligations.
A W1 tax code is added to a tax code when HMRC wants your Income Tax calculated using only your pay and allowances for the current week. Earlier earnings and tax paid in the same tax year are not taken into account, so it is often used temporarily when HMRC does not yet have your full pay details.
Working Rule Agreement - this is the largest industrial agreement with the construction industry and sets out minimum pay rates, travel expenses and death and accident benefits.
An X tax code at the end of a tax code means it is being operated on a non-cumulative or emergency basis. Only the current pay period is considered, so earlier pay and tax from the same tax year are ignored.
A 500T tax code normally gives £5,000 of tax-free pay and shows that HMRC needs to review items affecting your tax calculation. It may be used temporarily, sometimes on a non-cumulative basis, until HMRC has enough information to issue the correct code.
A 0T tax code gives no Personal Allowance against that job or pension, so tax is charged from the first pound using the relevant tax bands. It can be used when your allowance has been used elsewhere or HMRC does not have enough information.
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