Employee (Paye) - Taxation of employees

General taxation

The most important thing to note is that a tax year (for individuals) is always from the 6th of April until the following year 5th of April. For almost everyone who lives in the UK, there is a certain limit before which the income is tax-free. This amount practically changes every year, and it is also the basis for determining tax codes.

Above this amount, the tax bands change depending on earnings. Below are a some examples:

Tax 2013 – 2014 2014 – 2015 2015 – 2016 2016 – 2017
20 % £0 – £32,010 £0 – £31,865 £0 – £31,785 £0 – £32,000
40 % £32,011 – £150,000 £31,866 – £150,000 £31,786 – £150,000 £32,001 – £150,000
45 % above £150,000 above £150,000 above £150,000  above £150,000

The amount of the tax exemption threshold varies depending on the age and the total annual income, which includes all taxable sources of income, such as pension, or any interest of investments and savings, before tax deductions.

Filing a tax return 

The employee tax return (self-assessment) can be confusing for employers and employees alike. 
Based on the provisions of the legislation, employees, with a few exceptions, do not have to file an annual tax return, since the income verification documents made available by the employer (P60, P45, P11D, etc ..) already contain the earnings of the fiscal year, and also the deducted tax.