Glossary of UK Tax & Payroll Terms

An online tool that estimates your net (take-home) pay after all deductions, based on your gross salary and personal circumstances.

A calculator designed for freelancers and self-employed workers to estimate their take-home pay after business expenses, Income Tax, and National Insurance.

The amount you receive after all deductions (tax, NI, pension, student loan, etc.) are subtracted from your gross pay. Also called net pay.

Children under 16 (or under 20 if in approved education) who are financially dependent on you. Used to calculate Child Benefit and the High Income Child Benefit Charge.

A one-off or recurring payment in addition to your regular salary, often subject to Income Tax and National Insurance like normal earnings.

National Insurance contributions paid by your employer on your earnings above a certain threshold. Separate from Employee NI, which you pay yourself.

National Insurance contributions deducted from your salary as an employee. The rate and thresholds differ from Employer NI.

The UK tax year runs from 6 April to 5 April the following year. Tax rates, allowances, and thresholds are set for each tax year.

A range of income taxed at a specific rate. For example, the Basic Rate, Higher Rate, and Additional Rate bands for Income Tax.

The amount of income you can earn each tax year before you start paying Income Tax. For 2026/27, the standard Personal Allowance is £12,570.

A UK tax on earnings that funds state benefits, including the State Pension. Employees and employers pay NI on earnings above certain thresholds.

The system by which UK employers deduct Income Tax and National Insurance from employees’ wages before paying them.

An arrangement where you give up part of your salary in exchange for a non-cash benefit, such as pension contributions, reducing your taxable income.

A code issued by HMRC to employers, indicating how much tax-free income an employee is entitled to in a tax year.

Your total taxable income minus certain tax reliefs, used to determine eligibility for allowances and charges like the Personal Allowance taper and High Income Child Benefit Charge.

A form given to employees when they leave a job, showing how much tax has been paid so far in the tax year.

A summary form given at the end of the tax year showing your total pay and tax deducted by your employer.

A form employers use to report benefits in kind (such as company cars or health insurance) provided to employees.

A non-cash benefit provided by an employer, such as a company car or private medical insurance, which may be taxable.

Your total income before any deductions, including salary, bonuses, and other earnings.

The portion of your income that is subject to Income Tax after allowances and reliefs are applied.

A temporary tax code used by HMRC when your correct code is not available, often resulting in higher tax deductions until resolved.

A government initiative requiring employers to automatically enroll eligible employees into a workplace pension scheme.

The UK government department responsible for tax collection, National Insurance, and administering benefits.

The minimum hourly pay most workers in the UK are entitled to by law, depending on age and status.

A higher minimum wage rate for workers aged 21 and over in the UK.

The government-owned organization that administers student loans and grants in the UK.

A form submitted to HMRC (usually via Self Assessment) to report income, gains, and claim allowances or reliefs.

The amount of income you can earn before paying tax, such as the Personal Allowance or savings allowance.

The last day of the UK tax year: 5 April. Important for deadlines and tax planning.

The deadline for submitting your online Self Assessment tax return (usually 31 January following the end of the tax year).

A document provided by your employer each pay period showing your earnings, deductions, and net pay.

A legal requirement for employers to automatically enroll eligible employees into a workplace pension and make contributions.

A government payment to help with the cost of raising children. Subject to the High Income Child Benefit Charge if income is above a threshold.

The income level at which a tax, benefit, or contribution starts or changes rate (e.g., NI threshold, tax band threshold).

A portion of income that is tax-free or taxed at a lower rate, such as Personal Allowance, Marriage Allowance, or Blind Person’s Allowance.

A record of money taken out of or put into a company by its director, separate from salary or dividends. Important for limited company owners.

A payment made to company shareholders from profits, taxed differently from salary income.

UK tax legislation designed to assess whether a contractor is genuinely self-employed or a 'disguised employee' for tax purposes.

Gross pay is your total earnings before deductions; net pay is what you take home after all deductions.

A reduction in the amount of tax you have to pay, often available for pension contributions, charitable donations, or certain expenses.

A unique code that identifies your employer’s PAYE scheme with HMRC, shown on your payslip and P60.

NI contributions paid by employees and employers on earnings from employment.

Flat-rate NI contributions paid by self-employed people if profits are above a certain threshold.

NI contributions paid by self-employed people as a percentage of profits above a threshold.

The rules that determine how much you repay on your student loan, based on your income and when/where you studied. Plans 1, 2, 4, and 5 have different thresholds and write-off rules.

Money paid into a pension scheme, either by you or your employer, to save for retirement. Contributions can be made via salary sacrifice or relief at source.

The slice of your annual pay (£6,240 to £50,270) used to calculate pension contributions. Percentages are applied only to this 'band' rather than your total salary.

Your total earnings before any deductions (tax, NI, pension, etc.) are taken off.

Your take-home pay after all deductions have been made from your gross salary.

The system used by HMRC for individuals to report income and pay tax that isn’t collected through PAYE, such as self-employment or rental income.

A tax benefit allowing a lower-earning spouse or civil partner to transfer part of their Personal Allowance to their partner, reducing their tax bill.

A tax charge that reduces or removes Child Benefit for families where the highest earner has an Adjusted Net Income above £60,000.