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UK Tax Guide 2025/26

Complete PAYE Employee Tax Guide

Everything UK employees need to know about Pay As You Earn tax, tax codes, claiming expenses and when you need to file a Self Assessment return. Updated for 2025/26.

⚠ Important disclaimer This guide is for informational purposes only and is not professional tax advice. Your situation may be different — always check gov.uk and contact HMRC directly if you are unsure.

Contents

  1. 1. What is PAYE?
  2. 2. When Do You Need to File a Self Assessment?
  3. 3. How Your Tax Code Works
  4. 4. Claiming Work Expenses & Reliefs
  5. 5. Marriage Allowance & Blind Person's Allowance
  6. 6. Key Deadlines
  7. 7. High Income Child Benefit Charge
  8. 8. Official HMRC Resources on GOV.UK

1. What is PAYE?

Pay As You Earn (PAYE) is the system HMRC uses to collect Income Tax and National Insurance Contributions directly from your wages before you receive them. Your employer deducts the correct amount each pay period based on your tax code.

PAYE covers most employees in the UK. If all your income comes from one employer and you have no other income sources, you usually do not need to file a Self Assessment tax return — HMRC collects the right amount automatically.

How PAYE works:

  • Your employer uses your tax code to calculate how much tax to deduct
  • Tax and NI are deducted at source — you receive your net pay
  • HMRC receives your deductions and applies them to your annual tax bill

2. When Do You Need to File a Self Assessment?

Even if you are employed, you must file a Self Assessment (SA100) if any of the following apply:

  • You earned over £100,000 in the tax year
  • You have self-employment income over £1,000
  • You receive rental income or untaxed investment income
  • You claimed Child Benefit and either you or your partner earned over £50,000 (High Income Child Benefit Charge)
  • You have foreign income
  • HMRC sends you a notice to complete a return

⚠ Register for Self Assessment by 5 October after the end of the tax year in which the additional income arose.

3. How Your Tax Code Works

Your tax code tells your employer how much of your income is tax-free each pay period. The most common code is 1257L, which gives you the standard £12,570 personal allowance for 2025/26.

Common tax codes:

  • 1257L — Standard personal allowance (£12,570)
  • BR — All income taxed at basic rate (20%) — used for second jobs
  • 0T — No personal allowance (e.g. used when HMRC has no information)
  • K codes — Your deductions exceed your allowances

💡 If you think your tax code is wrong, contact HMRC on 0300 200 3300 or update it via your Personal Tax Account at gov.uk/personal-tax-account.

4. Claiming Work Expenses & Reliefs

Employed workers can claim tax relief on certain work expenses that their employer does not reimburse. These reduce your taxable income.

Uniform & tools

  • Specialist clothing (not everyday wear)
  • Tools and equipment for work
  • Laundering work uniform

Work travel

  • Mileage to temporary workplaces
  • Business travel not reimbursed
  • Professional subscriptions

Working from home

  • £6/week flat rate (no receipts needed)
  • Higher amount with evidence of extra costs
  • Available if employer requires home working

Professional fees

  • Membership of approved professional bodies
  • Subscriptions on HMRC approved list
  • Fees directly related to your employment

💡 Claim employment expenses using a P87 form (for amounts under £2,500) or via Self Assessment. You can backdate claims up to 4 years.

5. Marriage Allowance & Blind Person's Allowance

Marriage Allowance

If one partner earns below the personal allowance (£12,570) and the other is a basic rate taxpayer, you can transfer £1,260 of unused allowance — saving up to £252 per year in tax.

Blind Person's Allowance

If you are registered as blind, you get an additional £3,070 tax-free allowance (2025/26) on top of the personal allowance.

6. Key Deadlines

5 April
End of UK tax year
31 May
Employer must provide your P60 by this date
5 Oct
Deadline to register for Self Assessment if needed
31 Oct
Deadline for paper Self Assessment return
31 Jan
Deadline for online Self Assessment return and payment

Late filing penalties:

  • 1 day late: £100 fixed penalty
  • 3 months late: £10 per day (up to 90 days)
  • 6 months late: 5% of tax due or £300
  • Late payment: interest charged at Bank of England base rate + 2.5%

7. High Income Child Benefit Charge

If you or your partner receives Child Benefit and either of you earns over £60,000 (from April 2024), you must pay back some or all of the Child Benefit via a Self Assessment tax charge.

How it works:

  1. Income £60,000–£80,000: pay back 1% of Child Benefit for every £200 over £60,000
  2. Income over £80,000: pay back 100% of Child Benefit received
  3. You or your partner must register for Self Assessment and declare the charge

💡 You can stop claiming Child Benefit to avoid the charge and the need to file Self Assessment — but you will lose National Insurance credits if not working.

Have additional income to track?

UK Tax Tracker helps you record self-employment income, rental income or expenses alongside your PAYE employment.

Get started →