UK Tax Year
Unique globally — UK tax year runs 6 April to 5 April, not January-December. This quirk dates from 1752 calendar adjustments.
- Current tax year: 6 April 2025 - 5 April 2026 (the "2025-26 tax year")
- Self Assessment deadline: 31 January (online) for the previous tax year
- Payments on account: 31 January + 31 July if self-employed
- P60 from employer: by 31 May summarising year's PAYE
PAYE Income Tax
PAYE ("Pay As You Earn") is the UK employment tax system. Your employer deducts income tax + National Insurance from every paycheck.
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | £125,140+ | 45% |
⚠️ Personal Allowance taper: If you earn over £100,000, you lose £1 of allowance for every £2 earned above. Gone entirely by £125,140 — effective marginal rate is 60% in this range.
National Insurance
Separate from income tax, NI funds the NHS, state pension and benefits. Two rates:
- Class 1 Employee NI: 8% on £12,570 - £50,270, then 2% above
- Class 1 Employer NI: 13.8% above £9,100 (hidden cost for employer)
- Class 2 Self-Employed NI: £3.45/week flat (profits > £6,725)
- Class 4 Self-Employed NI: 6% on £12,570 - £50,270 profits, then 2%
Self Assessment
Required if any of these apply:
- Self-employed (including freelance, gig work)
- Annual income £100,000+
- Income from property (landlord)
- Foreign income
- Capital gains above £3,000/year
- Director of a company (usually)
- Savings/dividend income not covered by allowances
- Register at gov.uk/register-for-self-assessment by 5 October after the tax year ends
- File online by 31 January (previous year 2024-25 deadline: 31 Jan 2026)
- Pay tax owed by 31 January + payments on account 31 July
- Use HMRC app or online portal; accountants charge £200-500/year for simple returns
Double Taxation
If you're taxed in the UK and another country on the same income:
- Double Taxation Treaties: UK has agreements with 130+ countries
- Tax relief methods: Foreign Tax Credit (most countries), exemption (for some)
- US citizens: must file both UK + US regardless; complex, use specialist
- Non-dom status: abolished 2025 — all UK residents taxed on worldwide income from April 2025
- Split-year treatment: if you arrive/leave mid-year, may split tax treatment
💼 Get an accountant if: self-employed, freelance, US citizen (always), own a limited company, earn £100k+, own property abroad, receive overseas investment income. Fees £300-1,500/year; saves costly mistakes.