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If you're planning a move to the UK, or supporting employees who are, you’ll want to understand how the UK tax system works. If you're expecting it to be simple, think again.

From an unusually timed tax year to a sometimes bewildering PAYE system, the UK is full of quirks. When things go wrong (as they often do), it's up to you, not HMRC, to get things corrected.

The UK’s Odd Tax Year

The UK tax year runs from 6 April to 5 April. Why? Something to do with medieval calendars, the Gregorian calendar, and not wanting to change anything since the 1700s.

The key point: it doesn’t align with the calendar year. So don’t assume “this tax year” means January–December. In the UK, it doesn’t.

PAYE vs. Self-Assessment

Only around 6–7 million of the UK’s 30+ million taxpayers file tax returns each year. Most people are taxed through the PAYE (Pay As You Earn) system via payroll.

But just because you’re on PAYE doesn’t mean everything’s sorted.

If you:

• Earn over £100,000
• Have overseas income
• Receive share-based remuneration
• Change tax residence mid-year
  ...you may still need to file a return.

And if you don't? You could underpay tax, or miss out on a refund.

The Problems with Payroll

The PAYE system assumes you’ll earn the same every month. So if you receive a bonus or leave the UK mid-year, your tax could be way off.

Example: You earn £120,000 per year but leave in September. HMRC assumes you'll earn £120,000 all year and taxes accordingly. But you've only earned £60,000. You’ve overpaid and need to reconcile it, often through a tax return or P85 form.

Payments on Account: The Hidden Sting

If you owe more than £1,000 in tax and didn’t pay at least 80% of it through PAYE, HMRC will assume you’ll owe the same next year and charge you half of it upfront.

First-time self-assessors often get a shock when their bill is effectively 150% of what they expect.

Tax Returns for Refunds

HMRC’s digital systems don’t always play nicely together. If you’re owed a refund and you’re not in the tax return system, you’ll need to rely on slow and clunky forms like the R43 or DT-Individual.

If you’re in the self-assessment system? Refunds usually take 2-4 weeks.

Don’t Rely on Assumptions

We have seen it all: UK pensions taxed when they shouldn’t be, expats on UK payrolls long after leaving the country, and tax systems failing to communicate.

The lesson? Don’t wait. Understand your position early, especially if you’re coming to (or leaving) the UK.

Need Help?

At LSR Partners, we specialise in helping expats, employers, and globally mobile individuals understand their UK tax obligations and stay one step ahead.

Get in touch today to clarify your UK tax position.