UK Income Tax and Your Tax Code, Explained for Newcomers

This guide is for internationals who have just moved to the United Kingdom and are starting work or receiving a pension that has Income Tax taken off before it is paid. After reading it, you will understand how PAYE works, what the Personal Allowance and tax bands are for the current tax year, and how to find, read and query your tax code.

• What Income Tax covers
• Starting a job: how PAYE begins
• The Personal Allowance and tax rates
• Finding and reading your tax code
• Checking your payslip and fixing a wrong code
• FAQ

What Income Tax covers

Income Tax is a tax on your income, but not every type of income is taxed. According to GOV.UK’s introduction to Income Tax, you pay tax on things like:

• money you earn from employment
• profits from self-employment, including services sold through websites or apps
• most pensions, including state, company and personal pensions
• some state benefits
• rental income, unless you are a live-in landlord earning less than the Rent a Room Scheme limit
• benefits you get from your job
• income from a trust
• interest on savings above your savings allowance

You do not pay tax on the first £1,000 of income from self-employment (the trading allowance), the first £1,000 of income from property you rent (unless you use the Rent a Room Scheme), income from tax-exempt accounts such as Individual Savings Accounts (ISAs), dividends within your dividend allowance, some state benefits, and Premium Bond or National Lottery wins.

For most newcomers with a job, the main taxable income is salary, and the tax on it is collected through PAYE (Pay As You Earn). Under PAYE, your employer or pension provider takes Income Tax from each payment before it reaches you.

Starting a job: how PAYE begins

GOV.UK’s tax codes guidance sits within a step-by-step guide to starting a new job. The steps that matter for tax are these:

1. Get your National Insurance number. You will usually need it when you start your new job.
2. Share your details for employer checks. This can include proving your right to work. For a specific question about your immigration status, a regulated immigration adviser (OISC) or a solicitor (SRA) is the right contact.
3. Give your employer your personal information. To pay you, they need your National Insurance number, bank details, proof of identity, your student loan repayment plan if you have one, and details of any benefits you get.
4. Hand over a P45, or fill in the starter checklist. Your employer uses a P45 to work out how much tax to take. If you do not have a P45, the starter checklist gives your employer the details they need instead.
5. Check your first payslip. Your employer must give you a payslip on or before payday.

Behind the scenes, HM Revenue and Customs (HMRC) tells your employer which tax code to use, and your employer applies it to each payment.

The Personal Allowance and tax rates

The GOV.UK Income Tax rates page states that the current tax year runs from 6 April 2026 to 5 April 2027. How much you pay depends on how much of your income is above your Personal Allowance and how much falls into each band.

The Personal Allowance

The standard Personal Allowance is £12,570. This is the amount of income you do not pay tax on. If your adjusted net income is above £100,000, your allowance goes down by £1 for every £2 above that figure, so it reaches zero at £125,140 or above. If you claim Blind Person’s Allowance, that amount is added to your Personal Allowance.

Rates and bands outside Scotland

With a standard Personal Allowance of £12,570, the bands are:

• up to £12,570: 0%
• £12,571 to £50,270: 20%
• £50,271 to £125,140: 40%
• over £125,140: 45%

Income Tax bands are different if you live in Scotland. GOV.UK publishes the Scottish bands separately, and they are not covered here.

Reliefs and couples

Tax reliefs can reduce the tax you pay if you qualify, for example on charity donations, job expenses, private pension contributions and maintenance payments. If you are married or in a civil partnership and your income is less than the standard Personal Allowance, you may be able to claim Marriage Allowance to reduce your partner’s tax. Married Couple’s Allowance is only an option where you or your partner were born before 6 April 1935 and Marriage Allowance is not claimed.

Finding and reading your tax code

Your tax code tells your employer or pension provider how much Income Tax to take from your pay or pension. You get a separate tax code for each employment or pension you have.

Where to find it

• online, by checking your tax code for the current year (you need to sign in or create an online account)
• in the HMRC app
• on your payslip
• on a Tax Code Notice letter from HMRC, if you get one

The online account and app also show your tax codes for previous tax years, and let you sign up for paperless notifications so HMRC emails you when your code changes.

Reading it

The official pages used for this guide do not explain what each number and letter in a tax code means, so we do not attempt that here. What they do say is that HMRC’s Check your Income Tax service shows your Personal Allowance and tax code together, along with how much tax you have paid so far this year and how much you are likely to pay for the rest of it. Seeing the code next to the allowance HMRC has recorded for you is the practical way to understand what your code is based on.

Checking your payslip and fixing a wrong code

GOV.UK is clear that it is your responsibility to make sure you are paying the right amount of tax. The start-a-new-job guidance sets out the process in this order:

1. Compare your payslip with what Check your Income Tax shows for your code, your allowance and the tax paid so far.
2. Use GOV.UK’s step on checking whether the tax on your payslip is correct.
3. If the tax looks wrong, your tax code may be incorrect. GOV.UK has a dedicated step on what to do if you think your tax code is wrong.

The pages used here do not set out how long a correction takes or how any overpaid tax is returned. HMRC decides those details, and its guidance on wrong tax codes is the place to confirm them.

FAQ

What happens if I do not have a P45 from a previous UK employer?

GOV.UK says that if you do not have a P45, you fill in the starter checklist. It gives your new employer the details they need to work out your pay and tax.

I have two jobs. Do I have one tax code or two?

You get a tax code for each employment or pension you have. Each employer or pension provider uses the code HMRC gives them for that source of income.

Do the same tax bands apply in Scotland?

No. GOV.UK states that Income Tax bands are different if you live in Scotland. The bands in this guide are those shown for a standard Personal Allowance outside Scotland.

Do I get the full Personal Allowance in the year I arrive?

GOV.UK says most people in the UK get a Personal Allowance, and the standard amount is £12,570. The pages used here do not explain how it applies when you arrive part way through a tax year. Check your Income Tax shows the allowance HMRC has recorded for you.

Official sources: gov.uk · gov.uk · gov.uk

Last verified: 7 October 2026 against the official pages linked above. Rules and fees change; the official page always wins.

This is general information, not legal or immigration advice. Immigration advice in the UK may only be given by advisers regulated by the OISC or by solicitors regulated by the SRA.