Tax in 2026
Reviewed by CEO, Bradley Post
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Bradley has played a key role in RIFT Group’s growth and evolution since starting as its Sales and Marketing Director in 2010. In 2014, he became RIFT’s Commercial Director, leading the group’s div...
Read More about Bradley PostThis guide covers the main things most people need to understand: the tax year, Income Tax, tax codes, PAYE, National Insurance, Self Assessment, common deadlines, tax reliefs and refunds, and what happens if your circumstances change. It is written for the 2026/27 tax year, which runs from 6th April 2026 to 5th April 2027.
The UK tax year at a glance
The UK tax year does not follow the calendar year. It starts on 6th April and ends on 5th April the following year. That matters because allowances, tax bands, forms and deadlines all work around those dates.
A few dates come up again and again. If you are employed, 31st May is the deadline for your employer to give you a P60 if you were still working for them on 5th April. If you receive taxable benefits that are not payrolled, P11D reporting is handled after the tax year ends. If you need to register for Self Assessment for the previous tax year, the key date is 5th October. Paper tax returns are due by 31st October, online returns by 31st January, and any tax owed for Self Assessment is usually due by 31st January too. A second payment on account can fall on 31st July.
How income tax works
Income Tax is tax on your income. You do not pay it on every pound you earn, because most people get a Personal Allowance first. For the 2026/27 tax year, the standard Personal Allowance is £12,570. It is reduced by £1 for every £2 of adjusted net income above £100,000, and it is fully lost once income reaches £125,140.
For England, Wales and Northern Ireland, the main Income Tax bands for 2026/27 are:
- 20% on taxable income from £12,571 to £50,270
- 40% from £50,271 to £125,140
- 45% above £125,140
Scotland has different bands and rates for non-savings, non-dividend income, including starter, basic, intermediate, higher, advanced and top rates. For 2026/27, the Scottish higher rate starts at £31,093 and the top rate is 48% above £125,140.
That means “how much tax should I pay?” depends on both how much you earn and where in the UK you are taxed. This is one reason a broad UK tax guide needs to be careful not to present one set of rates as universal.
More on the 2026/27 Personal Allowance
What a tax code does
Your tax code tells your employer or pension provider how much Income Tax to take from your pay or pension. You get a separate code for each employment or pension. For many people with one job or pension and the standard allowance, the most common code is 1257L.
A tax code can change for all sorts of reasons. HMRC may adjust it to reflect benefits, untaxed income, unpaid tax from an earlier year, or changes to your job or pension. You can find your code on your payslip, in the HMRC app, online through your tax account, or on a tax code notice.
This is one of the areas where small mistakes can have a bigger impact than people expect. If your tax code looks unfamiliar or suddenly changes, it is worth checking it rather than assuming it is right.
PAYE, P45s, P60s and P11Ds
If you are employed, most tax is collected through PAYE. That means your employer deducts Income Tax and National Insurance before paying you. For many employees, that is the main way tax is dealt with and they will not need to file a tax return just because they have a job.
Three forms matter a lot here. A P45 is given when you leave a job. A P60 is given if you are still working for that employer at the end of the tax year. A P11D is used for taxable expenses or benefits that have not been payrolled, such as some company benefits in kind.
These forms do different jobs, but together they help you understand what you earned, what tax has already been taken, and whether anything else still needs to be accounted for.
What is a P45 and how do I get one?
National Insurance in simple terms
If you are employed, most tax is collected through PAYE. That means your employer deducts Income Tax and National Insurance before paying you. For many employees, that is the main way tax is dealt with and they will not need to file a tax return just because they have a job.
Three forms matter a lot here. A P45 is given when you leave a job. A P60 is given if you are still working for that employer at the end of the tax year. A P11D is used for taxable expenses or benefits that have not been payrolled, such as some company benefits in kind.
These forms do different jobs, but together they help you understand what you earned, what tax has already been taken, and whether anything else still needs to be accounted for
National Insurance Calculator
Working out your National Insurance (NI) can feel overwhelming but we've made it simple. Just enter a few details, and our calculator will take care of the rest. It tells you exactly how much NI you need to pay. It's quick, easy and free.
When you might need to send a tax return
Self Assessment is the system HMRC uses to collect Income Tax from people and businesses with income that is not fully dealt with through PAYE. HMRC says you must send a tax return if they ask you to. You must also send one if, in the last tax year, you were self-employed as a sole trader and earned more than £1,000 before expenses, were a partner in a partnership, had to pay Capital Gains Tax on a disposal, had to pay the High Income Child Benefit Charge and do not pay it through PAYE, or were an off-payroll worker repaying a student or postgraduate loan.
You may also need to file if you have untaxed income such as rental income, foreign income, tips and commission, or income from savings, investments and dividends. HMRC’s own checker is the safest way to confirm it if you are unsure.
That is an important update from older guidance you still see online. A simple “you earn over £100,000, so you must file” line is no longer a safe shortcut on its own.
Do I need to complete a tax return?
Guide to self-assessment forms
Self Assessment Deadlines That Matter
If you need to file for the first time, you generally need to tell HMRC by 5th October following the end of the tax year. Paper tax returns are normally due by 31st October, and online returns by 31st January. Self Assessment tax is also usually due by 31st January, with a second payment on account on 31st July if payments on account apply.
If you want HMRC to try to collect your Self Assessment bill through your tax code, there is also an earlier online filing date. For the 2024/25 return cycle shown on GOV.UK right now, that date is 30th December 2025.
The practical point is simple. Tax deadlines are much easier to deal with when you are early rather than right up against them.
What Happens If You File Or Pay Late
HMRC’s late filing penalties start with an initial £100 penalty. After 3 months, daily penalties of £10 can be added, up to a maximum of £900. After 6 months, there is a further penalty of 5% of the tax due or £300, whichever is greater, and after 12 months there can be another 5% or £300 charge, whichever is greater. HMRC also charges interest on late payment.
That can sound heavy, but it is still better to act late than not at all. HMRC also allows appeals in some cases where you have a reasonable excuse.
Marriage Allowance And Other Useful Reliefs
Marriage Allowance lets one spouse or civil partner transfer £1,260 of Personal Allowance to the other, reducing the recipient’s tax by up to £252 in the tax year. To benefit as a couple, the lower earner must normally have income below their Personal Allowance and the higher earner must usually be a basic-rate taxpayer.
It is worth mentioning separately from Married Couple’s Allowance, which is a different relief for couples where one partner was born before 6th April 1935.
Another area people miss is employment expense relief. HMRC says employees may be able to claim tax relief if they use their own money for things they must buy for work and use them only for work, as long as the employer has not already reimbursed the full cost.
Do you automatically get a tax rebate?
Tax Refunds And Overpaid Tax
A tax refund usually means you have paid too much Income Tax and HMRC needs to repay the difference. That can happen for several reasons, including leaving work part-way through a tax year, being on the wrong tax code, paying allowable job expenses yourself, or having changing PAYE income across the year. HMRC offers different claim routes depending on the situation, including online services for checking how to claim and a P50 route for some people who have stopped working.
Not every refund is automatic. HMRC calculates tax for many PAYE taxpayers after the tax year, but it will not necessarily know about every job expense or relief unless you claim it.
In many cases, you can claim for the current tax year and the previous 4 tax years, depending on the relief and the deadline.
Average refund £3,000
The average 4 year tax refund from RIFT is worth £3k. Can you afford to miss out?
How far back can I claim a tax refund in the UK?
Do You Pay Tax On Benefits, Savings And Dividends?
Some state benefits are taxable and some are not. GOV.UK lists taxable examples including the State Pension, Jobseeker’s Allowance, contribution-based Employment and Support Allowance, Carer’s Allowance, and Widowed Parent’s Allowance. Other benefits, such as Universal Credit, are not generally taxed as Income Tax in the same way.
Savings and dividends have their own rules too. Basic-rate taxpayers can usually receive up to £1,000 of savings interest tax-free under the Personal Savings Allowance, higher-rate taxpayers £500, and additional-rate taxpayers get no Personal Savings Allowance. For 2026/27, dividend tax rates above the dividend allowance are 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers, and the tax-free dividend allowance remains £500.
ISAs remain an important shelter here. The 2026/27 ISA subscription limit is £20,000.
If You Leave The UK Or Have Foreign Income
Your UK tax position does not simply switch off the moment you go abroad. UK residence for tax usually depends on the Statutory Residence Test, including automatic overseas tests, automatic UK tests and, where needed, the sufficient ties test. GOV.UK says you will only be UK resident if you meet one or more of the automatic UK tests or the sufficient ties test and do not meet any automatic overseas tests.
If you are leaving the UK and may not be coming back, or will be working abroad full-time for at least one full tax year, GOV.UK says you can claim online or use form P85 to tell HMRC you are leaving and want your UK employment tax position put right.
This is one of those areas where getting specific advice matters, because residence, foreign income, treaty claims and UK-source income can overlap quickly.
Common Questions People Ask In Practice
A lot of people do not really want a textbook explanation of tax. They want to know whether the amount coming off their pay looks right, whether they need to file a return, and whether there is anything they should be claiming.
That is why the most useful next steps on a guide like this are often practical ones. If the issue is a tax code, go to Decoding tax codes. If the issue is a tax return, go to Do I need to complete a tax return or our Guide to Self Assessment Forms. If the issue is whether too much tax has been paid, go to our guide Do you automatically get a tax rebate?, or our guide on How long does a pending tax rebate take
Final Thought
The UK tax system is full of jargon, but the questions most people are trying to answer are fairly human ones. Am I paying the right tax? Do I need to do anything? Have I missed something that could save me money or cause me a problem later?
That is the best way to use a guide like this. Start with the basics, check the part that applies to your situation, and take the next sensible step rather than trying to absorb everything at once. If you need a broader starting point for HMRC itself, What is HMRC? is a useful companion page. If you think you may have overpaid tax, our tax rebate calculator is the natural next step.
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