Do you know what your 2025–26 tax code means? It affects how much tax is taken from your pay or pension. Check now to make sure you're on the right code and not overpaying! Here's what the letters and numbers really mean.

You can find your tax code:

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

The tax codes are updated annually. The basic personal allowance for the 2025-26 tax year is £12,570. The corresponding tax code for an employee entitled to the standard tax-free Personal Allowance 1257L. This is the most common tax code and is used for most people with one job and no untaxed income, unpaid tax or taxable benefits (for example a company car).

There are a lot of other numbers and letters that can appear in your tax code. For example, there are letters that show where an employee is claiming the marriage allowance (M) or where their income or pension is taxed using the Scottish rates (S). If your tax code numbers are changed this usually means your personal allowance has been reduced.

There are also emergency tax codes (W1 or M1) which can be used if a new employee doesn’t have a P45. These codes mean that an employee’s tax calculation is based only on what they are paid in the current pay period.

If your tax code has a 'K' at the beginning this means that deductions due for company benefits, state pension or tax owed from previous years are greater than your personal allowance. However, the tax deduction for each pay period can’t be more than half your pre-tax pay or pension.

It is important to check your 2025-26 tax code to ensure the correct information is being used. 
 

From April 2025, updated ATED rates apply to residential properties held by companies and other Non-Natural Persons (NNPs). Make sure returns and payments are submitted by 30 April to avoid penalties. Reliefs may apply for commercial use.

The Annual Tax on Enveloped Dwellings (ATED) applies to NNPs who own interests in residential properties valued over £500,000. These provisions specifically affect entities such as companies, partnerships with company members, and managers of collective investment schemes, which are all classified as NNPs under the legislation.

Individuals who own property directly (rather than through a company) are not subject to ATED or ATED-related Capital Gains Tax (CGT). Furthermore, certain reliefs may be available if the property is used for commercial purposes.

Since 1 April 2025, ATED is charged based on the following property value bands:

For properties that were subject to ATED on 1 April 2025, both the return and payment must be submitted by 30 April 2025, covering the ATED period from 1 April 2025 to 31 March 2026. If a property is acquired after 1 April and falls within the scope of ATED, payment is due within 30 days of acquisition.

Penalties may be imposed for late filing, late payments, or inaccurate returns. Taxpayers have 30 days to appeal HMRC decisions, including penalties or determinations, by providing the grounds for the appeal.

Small gifts can mean big tax savings! Use the trivial benefits exemption in 2025–26 to reward employees with non-cash perks under £50 – no PAYE, no P11D, and no NIC. A smart, simple way to say thanks.

The rules providing trivial benefit payments provide a great opportunity to give small rewards and incentives to employees in the new 2025-26 tax year. The benefit-in-kind (BiK) trivial exemption applies to small non-cash benefits like a bottle of wine, or a bouquet of flowers given occasionally to employees or any other BiK classed as 'trivial' that falls within the exemption.

By taking advantage of the exemption employers can simplify the treatment of BiKs whilst at the same time offering a tax efficient way to give small gifts to employees. The employer also benefits as the trivial benefit payments do not have to be included on PAYE settlement agreements or disclosed on P11D forms. There is also a matching exemption from Class 1A National Insurance contributions.

The tax exemption applies to trivial BiKs where the BiK:

• is not cash or a cash-voucher; and
• costs £50 or less; and
• is not provided as part of a salary sacrifice or other contractual arrangement; and
• is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

The rules also allow directors or other office-holders of close companies and their families to benefit from an annual cap of £300. The £50 limit remains for each gift but could allow for up to £300 of non-cash benefits to be withdrawn per director or shareholder per year. The £300 cap doesn’t apply to employees. If the £50 limit is exceeded for any gift, the full value of the benefit will be taxable.

Kau Media Group (KMG) Ltd. sought to enforce two post-termination employment restriction (PTRs) contained in a contract of employment to restrict Mr. Hart, a former employee, from working for his proposed new employer, MiSmile Media Ltd. (MML).

Mr. Hart had worked for KMG from November 2020 to late 2024 as an Account Director. From 2021, the defendant became Account Director for MML, a longstanding client of KMG. On the 19th of September 2024, Mr. Hart informed Mr. Khokhar of KMG that he had since taken a job at MML despite being offered more favourable terms, having been approached by the CEO of MML. Mr. Khokhar however made it clear that taking such a job was against the terms of Mr. Hart’s contract.

On the 25th of September 2024, Mr. Hart inaccurately told the claimant he had already signed a contract with MML, before proceedings were started on the 13th of December 2024. The High Court however concluded that KMG did not establish that the PTRs were enforceable with respect to confidentiality and refused the application for injunctive relief on the grounds of ‘restraint of trade’.

The onus was on KMG to demonstrate that the PTRs were reasonable, protected its legitimate business interests, and that any restrictions were commensurate with the benefits secured under the contract. Even though the services provided by MML and KMG were overtly identical, making them potential competitors, the work involved did not comprise a core part of KMG’s dental sector business and thus MML was not effectively in direct competition with KMG. Settled case law has established that legitimate interest does not cover “the skill, experience, know-how, and general knowledge" acquired by an employee, in order to rely on this interest, KMG should have demonstrated ‘objective’ knowledge.

Thus, before incorporating or seeking to enforce any PTRs, ensure that any PTR relied upon is reasonable between the parties, protects the company’s legitimate business interests, and does not venture beyond these demarcations, or else the PTR may be rendered void and unenforceable.

1 May 2025 – Due date for corporation tax due for the year ended 30 July 2024.

19 May 2025 – PAYE and NIC deductions due for month ended 5 May 2025. (If you pay your tax electronically the due date is 22 May 2025).

19 May 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2025.

19 May 2025 – CIS tax deducted for the month ended 5 May 2025 is payable by today.

31 May 2025 – Ensure all employees have been given their P60s for the 2024/25 tax year.

1 June 2025 – Due date for corporation tax due for the year ended 31 August 2024.

19 June 2025 – PAYE and NIC deductions due for month ended 5 June 2025. (If you pay your tax electronically the due date is 22 June 2025).

19 June 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2025.

19 June 2025 – CIS tax deducted for the month ended 5 June 2025 is payable by today.