Saturday, 30 May 2026
Tax
PAYE, tax codes, National Insurance, self-assessment and everything else HMRC wants from UK students and young workers.
10 articles
tax
From 6 April 2026, the tax on dividends rose by two percentage points — the basic rate went from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. It only affects dividends held outside an ISA, making the ISA wrapper more valuable.
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Thanks to the £1,000 trading allowance, you can earn up to £1,000 a year from a side hustle without paying tax or telling HMRC. Earn more and you need to register for Self Assessment and pay tax on the profit above the allowance.
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Receiving money from your parents is normally tax-free — there's no UK gift tax on the person receiving it. The only consideration is inheritance tax on the giver's estate, which can apply if they give large sums and die within seven years.
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On your first job you pay no income tax on earnings up to £12,570 a year, then 20% on income above that up to £50,270. National Insurance is 8% on earnings over £12,570. So a starting salary of, say, £25,000 leaves most of it in your pocket.
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The personal allowance is the slice of income you can earn tax-free each year — £12,570 for 2026/27. It's frozen until 2031, which means as wages rise, more of your income gets taxed over time, an effect known as fiscal drag.
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If you've paid tax but earned under £12,570 in the year, or were put on the wrong tax code, you've likely overpaid and can claim it back from HMRC. Students working part-year or in summer jobs are especially prone to this.
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Your tax code controls how much of your income is tax-free. The standard code for 2026/27 is 1257L, reflecting the £12,570 personal allowance. A wrong code means you over- or under-pay tax, so it's worth knowing how to check it.
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National Insurance is a tax on your earnings that builds your entitlement to the state pension and certain benefits. Employees pay 8% on income above £12,570 a year, deducted automatically from your pay alongside income tax.
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Gross pay is the headline figure before anything is taken off. Net pay — your take-home — is what's left after income tax, National Insurance, pension and any student loan come out. Understanding the gap helps you avoid nasty surprises on payday.
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You must register for Self Assessment if you earn more than £1,000 from self-employment, or have other untaxed income like rental or significant savings interest. The deadline to register is 5 October after the tax year, with online returns due by 31 January.