Tax🇬🇧 London, United Kingdom

Income tax, PAYE & National Insurance

For most employees there is almost nothing to do — your employer deducts income tax and National Insurance from each payslip through PAYE before you are paid, and that is usually the end of it. You only file a Self Assessment return if you have untaxed income (self-employment, rental, high income or similar). Note two quirks: the UK tax year runs 6 April to 5 April, and whether you are taxed on worldwide income depends on tax residency under the Statutory Residence Test.

Total cost
Income tax is charged on the bands above (roughly 20/40/45% in England) after a personal allowance of about £12,570, plus Class 1 National Insurance on earnings above its threshold. There is no fee to operate PAYE or to file Self Assessment — confirm all current rates and thresholds on GOV.UK.
Time needed
PAYE is automatic from your first payslip with nothing to file. If you do need Self Assessment, registering and filing online is the main task, due by 31 January after the 5 April year-end.
Validity
PAYE continues automatically for as long as you are employed. The tax year runs 6 April to 5 April; HMRC reconciles each year and issues a refund or a bill if your PAYE deductions were off. Tell HMRC if your circumstances change (second job, leaving the UK) so your tax code stays correct.
Verified
June 2026
Medium confidence·Employees earning a salary in the UK. The headline relief for newcomers: tax is collected automatically through PAYE (Pay As You Earn) by your employer, so most employees never file a tax return at all. This covers how the bands, National Insurance and the unusual tax year fit together.

Before you start

  • A National Insurance (NI) number (apply on GOV.UK once you can prove your right to work — it ensures your tax and contributions are recorded correctly)
  • An employment with a UK employer who operates PAYE (they handle the deductions)
  • For anything beyond standard salary: an assessment of whether you must register for Self Assessment

Step-by-step

  1. 1

    Let PAYE do the work via your employer

    Once you start a UK job, your employer registers you on PAYE and deducts income tax and National Insurance from each pay packet automatically. You receive a payslip showing gross pay, tax, NI and net pay. Give your employer your details (and any P45 from a previous UK job) so they apply the right tax code.

    Via employerWho: Your employerFrom your first payslipNo fee — tax/NI deducted from pay
  2. 2

    Understand your bands and personal allowance

    For England, most people get a tax-free personal allowance of around £12,570, then pay roughly 20% (basic), 40% (higher) and 45% (additional) on income in successive bands. These thresholds are frozen for several years but should be confirmed on GOV.UK, as the exact figures and band edges change.

    OnlineWho: YouReferenceIncome tax per the bands above
  3. 3

    Check your National Insurance contributions

    National Insurance is a separate deduction from income tax that funds the state pension and benefits. Employees (Class 1) pay a percentage of earnings above a threshold; your employer also contributes. It appears on your payslip alongside income tax — verify the current employee rate on GOV.UK.

    OnlineWho: You / employerFrom your first payslipClass 1 NI — a percentage of earnings above the threshold (verify current rate)
  4. 4

    File a Self Assessment only if you actually need to

    Most employees never file a return. You must register for Self Assessment with HMRC if you have untaxed income — self-employment, significant rental or savings income, or very high earnings, for example. Use the GOV.UK 'check if you need to send a tax return' tool; if it says no, PAYE has you covered.

    OnlineWho: You (only if required)Tax year ends 5 April; online return due by 31 January afterFree to file; tax due depends on the income

Documents you’ll need

  • National Insurance number
  • P45 from any previous UK employer (so the correct tax code is applied)
  • P60 — the year-end summary your employer gives you (keep it for your records)
  • Payslips showing income tax and NI deductions
  • A Government Gateway account if you ever need Self Assessment or to check your tax online

Things most newcomers don’t know

Most employees never file a tax return — PAYE handles it.

Unlike countries where everyone files annually, UK income tax is deducted at source by your employer through PAYE. If your only income is your salary, there is usually nothing to submit. Self Assessment is only for untaxed income like self-employment or rental.

Source: GOV.UK — check if you need to send a Self Assessment tax return

The tax year runs 6 April to 5 April, not the calendar year.

This historical quirk catches out newcomers. Allowances, bands and the P60 year-end summary all align to this 6 April–5 April year, and the Self Assessment deadline (31 January) is for the year that ended the previous 5 April.

Source: GOV.UK — Self Assessment deadlines

Income tax and National Insurance are two separate deductions.

Your payslip shows both: income tax (the bands) and National Insurance (which funds the state pension and benefits). They have different thresholds and rates, so your headline 'tax' is really the two combined — worth understanding when you read a payslip.

Source: GOV.UK — National Insurance: how it works

Whether you are taxed on worldwide income depends on tax residency.

The Statutory Residence Test (based largely on days spent in the UK and your ties here) determines if you are a UK tax resident and therefore taxed on worldwide income. In your arrival year especially, this is genuinely complex — get advice if you have foreign income or assets.

Source: GOV.UK / HMRC — tax on foreign income & Statutory Residence Test

Common mistakes to avoid

  • Assuming you must file a return like back home — most salaried employees do not need to
  • Being caught out by the 6 April–5 April tax year when reading allowances or deadlines
  • Ignoring an emergency tax code on early payslips — give your employer your P45/details so the right code is applied
  • Overlooking the Statutory Residence Test if you have foreign income — residency drives what the UK taxes

Make it your personal checklist

Globe Quest turns this into a tracked, AI-personalized plan for London — timed to your move date, with reminders so nothing slips. Free to start.

Sources

Last verified June 2026. Government processes change — always confirm critical details against the official source before acting.