Key takeaways

  • File your 2025-26 return online by 30 December 2026 and HMRC can collect what you owe through your PAYE tax code instead of on 31 January 2027.
  • You must owe less than £3,000; HMRC's manual sets the limit at £2,999.99, and a part payment to get under it does not count.
  • You must already pay tax through PAYE, as an employee or on a workplace or private pension.
  • The tax is taken in equal instalments over 12 months from your wages or pension, so a £1,800 bill is about £150 a month.
  • HMRC will not code out the bill if it would take more than 50% of your PAYE income or more than double your usual tax.
  • Paper returns had to reach HMRC by 31 October 2026 for this route; that date has passed.
  • Coding out is automatic unless you tick the box on your return asking HMRC not to.

If you owe less than £3,000 for 2025-26 and already pay tax through PAYE, you can have HMRC collect the bill through your tax code, as long as you file your return online by 30 December 2026. HMRC then adjusts your 2027-28 tax code and takes the tax in equal monthly amounts from your wages or pension, instead of you paying a lump sum on 31 January 2027. It happens automatically unless you opt out on the return.

Who can pay through their tax code?

GOV.UK’s pay through your tax code page says all three of these must apply:

  • you owe less than £3,000 on your tax bill
  • you already pay tax through PAYE, for example as an employee or on a company pension
  • you filed a paper return by 31 October or an online return by 30 December

HMRC’s Self Assessment Manual at SAM141010, updated 2 November 2026, puts the limit at £2,999.99 or less. That figure includes any unpaid payments on account for the year.

Key dates for the 2025-26 return

DateWhat it means
31 October 2026Paper return deadline for coding out (passed)
30 December 2026Online return deadline for coding out
31 January 2027Online filing and payment deadline if not coded out
April 20272027-28 tax code starts collecting the bill

The 2026 tax return form says HMRC will try to collect a bill under £3,000 “by adjusting your 2027-28 tax code”. The deduction then runs across the 2027-28 tax year.

When HMRC will not code out your bill

Meeting the three conditions is not always enough. GOV.UK lists cases where you cannot pay this way:

  • you do not have enough PAYE income for HMRC to collect it
  • you would pay more than 50% of your PAYE income in tax
  • you would end up paying more than twice as much tax as you normally do
  • you owed £3,000 or more and made a part payment to bring it under £3,000
  • the amount is Class 2 National Insurance, unless it has been due since before 6 April 2015

If HMRC cannot code out the bill, you pay it in the usual way by 31 January 2027. The manual says that if an amount cannot be collected in one year, it is picked up through the next return.

How much will come out of your pay?

The tax is taken from your salary or pension in equal instalments over 12 months, on top of your usual deductions.

Amount owed for 2025-26Extra tax a month in 2027-28
£600about £50
£1,800about £150
£2,999about £250

These are simple divisions by 12. Your actual figure depends on how your employer’s payroll applies the code. Check your new code in your personal tax account when it arrives.

Step by step: making sure it is coded out

  1. Gather your figures early. You need P60s, interest and any other income for 6 April 2025 to 5 April 2026.
  2. File online by Wednesday 30 December 2026. Allow time for problems with logins or the online services helpdesk, because 30 December falls between the bank holidays.
  3. Leave the opt-out box blank. The return asks you to put an X in a box if you do not want HMRC to collect the tax through your code.
  4. Check your calculation. It should show the amount as included in your PAYE code for 2027-28.
  5. Watch for the new code. Check your 2027-28 tax code and your first April 2027 payslip.

Which applies to you?

  • If you owe £2,500 and are employed, file online by 30 December and the bill is spread over 2027-28.
  • If you owe £3,400, coding out is not available; pay by 31 January 2027 or ask about a Time to Pay arrangement.
  • If you are self-employed with no PAYE income, you cannot use this route; consider a budget payment plan.
  • If you would rather pay now, opt out on the return and pay by 31 January 2027.

Clients repaying a Winter Fuel Payment through Self Assessment should read Winter Fuel Payment recovery, which covers how that charge is collected.

What about payments on account?

Coding out deals with what you owe for 2025-26. GOV.UK’s payments on account guide explains that you make payments on account if last year’s bill was £1,000 or more and less than 80% was collected at source. SAM141010 says payments on account are reduced automatically to reflect any amount transferred to PAYE. Check your statement for anything still due on 31 January 2027. Our payments on account guide has more detail.

From April 2029, Budget 2026 lets people with enough PAYE income choose to pay all their Self Assessment tax through PAYE during the year. See payments on account reform.

What advisers should do

  • List PAYE clients with expected bills under £3,000 and set an internal filing date before 18 December.
  • Ask each client whether they want coding out, and record the answer.
  • Warn clients with a bill near £3,000 that a part payment will not bring them under the limit.

Frequently asked questions

What is the deadline to pay Self Assessment through my tax code?

File your 2025-26 return online by 30 December 2026. The paper deadline for this route was 31 October 2026.

What is the maximum I can pay through my tax code?

You must owe less than £3,000. HMRC’s manual sets the limit at £2,999.99, including any unpaid payments on account.

Can I pay part of my bill to get under £3,000?

No. GOV.UK says you cannot make a part payment to meet the threshold.

Do I have to have my bill collected through my tax code?

No. Coding out happens automatically if you qualify, but you can put an X in the box on your return to ask HMRC not to.

When will the tax come out of my pay?

Over the 2027-28 tax year, in equal instalments over 12 months, starting from April 2027.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.