Paying your tax bill through your tax code
If you're employed or get a pension, and you owe less than £3,000, you don't have to find the money by 31 January. File your 2025-26 return online by 30 December 2026 and HMRC can collect it from your pay over the following tax year. You pay it in 12 equal monthly amounts, with no interest.
The conditions
- You owe less than £3,000. You can't make a part payment to get the bill under £3,000.
- You already pay tax through PAYE, from a job or a workplace or private pension.
- You file online by 30 December 2026, or on paper by 31 October 2026.
- Your PAYE income is high enough. HMRC won't take more than 50% of it, or more than double the tax you'd normally pay.
- Voluntary Class 2 National Insurance can't be collected this way. Pay that by 31 January 2027.
What to do on the return
It's automatic. Near the end of the return there's a box saying, in effect, "put X if you don't want us to collect tax through your tax code". Leave that box empty. Then submit by 30 December.
When and how it's collected
HMRC adjusts your 2027-28 tax code, which starts on 6 April 2027. It does this by reducing your tax-free allowance, so a bit more tax comes off each payslip.
Example
You owe £1,200 for 2025-26 and pay basic-rate tax. To collect £1,200 at 20%, HMRC reduces your allowance by £6,000. A 1257L code would become roughly 657L for 2027-28. That's about £100 extra tax a month, from April 2027 to March 2028.
Is it a good idea?
- Pros: no lump sum in January, no interest, and nothing to remember.
- Cons: your take-home pay is lower for a year, and it can be confusing if you change jobs. You still pay the same total.
If you also have to make payments on account towards the next year, those are separate. HMRC's calculation, shown before you submit, tells you what's due and when.
See if you qualify. The calculator works out what you'll owe for 2025-26 and tells you whether it can go through your tax code. It also shows roughly how much a month that would be.
Work out my figures - freeSources
General guidance, not tax advice. Tax code examples are approximate. HMRC works out the exact code.