Quick Answer

The personal allowance for 2026/27 is £12,570. This is the amount you can earn each year completely free of income tax. If you earn less than £12,570, you pay no income tax at all. The allowance has been frozen at £12,570 since April 2021 and is expected to remain frozen until at least April 2028.

Quick Answer

You start paying income tax when your annual earnings exceed £12,570 (the personal allowance in 2026/27). For employees, tax is deducted automatically through PAYE. For monthly earners, tax kicks in on earnings above £1,047.50 per month (£12,570 ÷ 12).

Quick Answer

The higher rate (40%) starts on earnings above £50,270 per year in 2026/27. Between £12,570 and £50,270 you pay 20% basic rate. Above £50,270 you pay 40% on the excess. Above £125,140, the additional rate of 45% applies.

Quick Answer

Pensioners get the same personal allowance as everyone else: £12,570 in 2026/27. If your total income from State Pension, private pension, and other sources is below £12,570, you pay no income tax. The State Pension is £12,548/year in 2026/27 — just below the threshold, meaning State Pension alone does not trigger income tax, but any additional income might.

Quick Answer

A tax code is a reference HMRC gives your employer or pension provider to show how much tax-free income you are entitled to. The most common is 1257L — meaning you get a £12,570 tax-free personal allowance. Your tax code appears on your payslip, P60, and HMRC correspondence.

Quick Answer

1257L is the standard UK tax code for 2026/27 — used by the majority of employees. The number 1257 represents £12,570 of tax-free personal allowance (drop the last digit and add a zero). The letter L means you are entitled to the standard personal allowance. If your code is 1257L you are on the standard tax-free amount.

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BR means Basic Rate — all your income from this source is taxed at 20% with no personal allowance. It is common for second jobs, second pensions, or when HMRC cannot confirm your personal allowance entitlement. If you have a BR code and believe it is wrong, contact HMRC on 0300 200 3300 or update via your Personal Tax Account.

Quick Answer

Emergency tax is applied when HMRC does not have enough information to give you the correct tax code. The most common emergency code is 1257L W1/M1, which taxes you on a non-cumulative basis each period. It often applies when starting a new job without a P45. You may overpay tax temporarily and receive a rebate once HMRC updates your code. Check your code on your payslip.

Quick Answer

HMRC changes tax codes when: you start or leave a job, receive a taxable benefit from your employer, your State Pension increases above your personal allowance, you have underpaid tax in a previous year, or your income from other sources changes. HMRC sends a PAYE coding notice (P2) explaining any change. If you disagree, contact HMRC to have it corrected.

Quick Answer

Your tax code appears on: your payslip, your P60 (annual tax certificate), letters from HMRC, your Personal Tax Account at gov.uk/personal-tax-account, or the HMRC app. If you think your code is wrong, contact HMRC on 0300 200 3300.

Quick Answer

You may be owed a tax rebate if: you were on emergency tax and paid too much, you stopped working part way through the tax year, you paid too much tax on savings interest, you claimed expenses you are entitled to but did not claim at the time, or HMRC made an error in your tax code. Check via your Personal Tax Account at gov.uk.

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For employees: HMRC may automatically refund you if you have overpaid. You can also claim via your Personal Tax Account at gov.uk/personal-tax-account, by phone (0300 200 3300), or on a Self Assessment return if you file one. For car tax refunds: cancel at gov.uk/cancel-vehicle-tax and HMRC will refund full months remaining.

Quick Answer

HMRC typically processes income tax refunds within 5 working days if claimed online, or up to 6 weeks if claimed by post or phone. Some refunds are issued automatically at tax year end. If it has been more than 8 weeks, contact HMRC on 0300 200 3300.

Quick Answer

Yes, in many cases. HMRC reconciles PAYE records at tax year end and automatically issues refunds for overpaid tax — usually by cheque or bank transfer. You should receive a P800 tax calculation letter if HMRC believes you have overpaid. If you receive a P800 showing a refund, you can claim it online immediately.

Quick Answer

Most UK adults can earn savings interest tax-free through two allowances: the Personal Savings Allowance (PSA) — £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, nil for additional rate taxpayers — and the Starter Rate for savings (£5,000 at 0%) for low earners. ISA interest is always tax-free regardless of amount.

Quick Answer

Most people do not pay tax on savings interest because they stay within their Personal Savings Allowance. If your interest exceeds the allowance, the excess is taxed at your marginal rate (20%, 40%, or 45%). HMRC collects tax on savings interest through your tax code adjustment or Self Assessment — not by deducting it from your savings account directly.

Quick Answer

Yes. All ISA interest, dividends, and capital gains are completely tax-free, regardless of amount. The annual ISA allowance is £20,000 per person per tax year. You can hold cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs.

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Yes — pension income is taxable. Your State Pension, private pension, and workplace pension income all count as taxable income. However, the first £12,570 per year is covered by your personal allowance. The first 25% of your pension pot can usually be taken tax-free as a lump sum.

Quick Answer

The State Pension is taxable income, but HMRC deducts tax through your tax code, not at source. In 2026/27 the full State Pension is £12,548/year — just below the £12,570 personal allowance. If you have no other income, you pay no tax on the State Pension. If you have other income (private pension, part-time work), the State Pension uses up part of your allowance.

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Legitimate ways to reduce pension tax: take your 25% tax-free lump sum before drawing income; draw pension income up to your personal allowance only; use salary sacrifice to build pension tax-efficiently; use ISAs alongside pensions (ISA withdrawals are tax-free); consider pension income timing to stay in the basic rate band. Always take regulated financial advice before making pension withdrawal decisions.

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Pension income above £12,570/year is taxed at your marginal rate. If your total income (State Pension + private pension) is £20,000, you pay 20% on £7,430 (the amount above £12,570) = £1,486/year in tax. At £30,000 total income you pay 20% on £17,430 = £3,486/year. Use the kaeltripton.com income tax calculator for exact figures.

Quick Answer

Inheritance tax (IHT) is a tax on the estate (property, money, and possessions) of someone who has died. The standard rate is 40% on the value of the estate above the nil-rate band threshold. IHT is paid by the estate before assets are distributed to beneficiaries — not by the beneficiaries themselves.

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IHT must be paid within 6 months of the end of the month in which the person died. Late payment incurs interest. The executors pay IHT from the estate before distributing assets. If the estate includes property, instalments over 10 years may be available.

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Legitimate IHT planning includes: giving gifts (up to £3,000/year IHT-free; unlimited if you survive 7 years), leaving 10%+ to charity for reduced 36% rate, using pension pots (usually outside estate), taking out life insurance written in trust to cover the IHT bill, and using spouse/civil partner exemption to defer IHT. Always take specialist advice.

Quick Answer

The annual gift exemption is £3,000 per year (unused exemption can carry forward one year = up to £6,000). Additionally: small gifts of up to £250 to any number of people, wedding gifts (£5,000 to a child, £2,500 to grandchild, £1,000 others), and regular gifts from surplus income are also IHT-free. Larger gifts are potentially exempt transfers — IHT-free if you survive 7 years.

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Capital gains tax (CGT) is paid on the profit when you sell an asset that has increased in value. You pay CGT on the gain (profit), not the total sale price. Common assets attracting CGT: second homes, investment property, shares (outside ISA/pension), business assets. Your main home is usually exempt (private residence relief).

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Legitimate CGT reduction strategies: use your annual £3,000 CGT allowance each year; hold investments in an ISA (CGT-free); transfer assets to a spouse before selling (doubles the allowance); offset gains with losses from other investments; time sales across two tax years to use two allowances; claim private residence relief on your main home. Take professional advice for significant gains.

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Road tax (Vehicle Excise Duty or VED) is an annual tax paid on vehicles used on UK public roads. The amount depends on the vehicle's CO2 emissions and registration date. Tax a vehicle at gov.uk/tax-your-vehicle, by phone, or at a Post Office. You must have valid MOT and insurance to tax a vehicle.

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From April 2025, electric vehicles (EVs) are no longer exempt from VED. New EVs registered from April 2025 pay £10 in year one, then the standard £195 flat rate from year two. EVs registered before April 2017 pay £20/year. The EV exemption that existed until March 2025 has ended.

Quick Answer

Cancel your road tax (get a refund) at gov.uk/cancel-vehicle-tax or by telling DVLA you are: selling the vehicle, declaring it off road (SORN), scrapping it, or it has been stolen. DVLA refunds complete months remaining. Refunds are sent to the registered keeper by cheque or original payment method. Cancel as soon as the qualifying event happens — do not delay.

Quick Answer

Yes, in some circumstances. You can tax at a Post Office using a V62 form (application for V5 replacement). You cannot tax online without the V5 reference number. If you have just bought the car: the seller should give you the green new keeper slip (V5C/2) — use this to tax at a Post Office while you wait for the new V5. Apply for a replacement V5 at gov.uk/get-vehicle-registration-certificate.

Quick Answer

No. You cannot tax a vehicle without a valid MOT (unless the vehicle is exempt from MOT). MOT-exempt vehicles include those made before 1960. For all other vehicles, the DVLA checks MOT status automatically when you tax online. Driving without a valid MOT is illegal (unless driving to a pre-booked MOT test).

Quick Answer

The first £30,000 of a genuine redundancy payment is tax-free and exempt from National Insurance. Any redundancy payment above £30,000 is taxed as income at your marginal rate. Note: payment in lieu of notice (PILON), holiday pay, and any contractual bonuses are fully taxable — only the redundancy element itself gets the £30,000 exemption.

Quick Answer

Only above £30,000. If your redundancy package totals £60,000, the first £30,000 is tax-free and the remaining £30,000 is taxed at your marginal rate. For a basic rate taxpayer: £30,000 × 20% = £6,000 tax on the excess. For a higher rate taxpayer: £30,000 × 40% = £12,000 tax on the excess.

Quick Answer

You need to complete a Self Assessment tax return if in the previous tax year you: were self-employed (sole trader or partner), earned over £100,000, had untaxed income over £2,500, were a company director, received income from abroad, or had capital gains above the annual exempt amount. Register at gov.uk/register-for-self-assessment.

Quick Answer

The UK tax year runs from 6 April to 5 April the following year. The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. Self Assessment returns for 2025/26 (ended 5 April 2026) are due: online by 31 January 2027; paper return by 31 October 2026.

Quick Answer

A simple online Self Assessment tax return takes 30–90 minutes to complete if you have all your information ready. You need: income from all sources (employment, self-employment, property, savings, investments), P60/P11D from employers, expenses records if self-employed, and your UTR (Unique Taxpayer Reference). HMRC processes online returns and usually calculates any tax owed or refund due immediately.

Quick Answer

Corporation tax is paid by UK limited companies on their taxable profits. The main rate is 25% for profits above £250,000 (from April 2023). The small profits rate is 19% for profits under £50,000. Between £50,001 and £250,000, a marginal relief calculation applies.

Quick Answer

Corporation tax is due 9 months and 1 day after your company accounting period ends. For a company with a 31 March year end, corporation tax is due by 1 January the following year. You must also file a Company Tax Return (CT600) with HMRC within 12 months of your accounting period end.

Quick Answer

The standard VAT rate in the UK is 20%. The reduced rate is 5% (domestic fuel and power, children's car seats etc). The zero rate is 0% (most food, children's clothes, books, public transport). You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period (2024/25 threshold).

The personal allowance is £12,570 in 2026/27. Earnings below this are tax-free. The allowance has been frozen since April 2021 and is expected to remain so until at least April 2028.

The higher rate (40%) applies to earnings above £50,270 per year in 2026/27. Between £12,570 and £50,270 you pay 20% basic rate. Above £125,140 the additional rate of 45% applies.

1257L is the standard UK tax code for 2026/27. The number represents £12,570 of tax-free personal allowance. L means you get the standard personal allowance. It is used by the majority of UK employees.

Emergency tax is applied when HMRC lacks information to give you the correct code. The most common code is 1257L W1/M1, taxing you on a non-cumulative basis. You may overpay and receive a refund once HMRC updates your code.

You may be owed a rebate if you were on emergency tax, stopped working mid-year, overpaid on savings interest, or HMRC made a coding error. Check via your Personal Tax Account at gov.uk or wait for a P800 letter from HMRC.

Basic rate taxpayers get a £1,000 Personal Savings Allowance. Higher rate taxpayers get £500. Additional rate taxpayers get nothing. ISA interest is always tax-free regardless of amount.

The first £30,000 of a genuine redundancy payment is tax-free and NI-free. Any amount above £30,000 is taxed at your marginal rate. PILON and holiday pay are fully taxable.

IHT is 40% on estates above £325,000 (nil-rate band). An additional £175,000 residence nil-rate band applies when leaving your home to direct descendants. Married couples can combine allowances for up to £1m IHT-free.

IHT is due within 6 months of the end of the month of death. Executors pay from the estate before distributing to beneficiaries. Late payment incurs interest.

The annual gift exemption is £3,000/year (up to £6,000 if previous year unused). Additional exemptions: £250 small gifts to any number of people, wedding gifts, and regular gifts from surplus income. Larger gifts may be IHT-free if you survive 7 years.

From April 2025, EVs are no longer VED-exempt. New EVs pay £10 in year one then £195/year standard rate. Pre-2017 registered EVs pay £20/year.

Yes — at a Post Office using a V62 form, or using the green new keeper slip (V5C/2) if you have just bought the car. You cannot tax online without a V5 reference number.

The UK tax year runs from 6 April to 5 April. The 2026/27 tax year runs 6 April 2026 to 5 April 2027. Self Assessment returns for 2025/26 are due online by 31 January 2027.