Overview
HM Revenue & Customs (HMRC) has updated the P9X guidance for tax codes applicable from 6 April 2026 to 5 April 2027, confirming that the basic Personal Allowance remains at £12,570, and introducing the emergency tax code 1257L for all employees. (gov.uk)
This article walks through what these changes mean, how they impact payroll, and what both employers and employees must do to comply.
What’s Changing and Why It Matters
- Personal Allowance stays frozen at £12,570 for 2026/27. This allows individuals to earn up to this amount tax-free. (gov.uk)
- Emergency tax code 1257L will apply uniformly across all employees until proper tax codes are issued. (gov.uk)
- Thresholds for PAYE remain consistent at £242 per week or £1,048 per month. This is the point at which tax deductions begin via PAYE. (gov.uk)
Responsibilities for Employers
Employers should start preparing their payroll systems now:
- Review employee records well in advance of 6 April to identify tax code prefixes (e.g. “S” or “C”). (gov.uk)
- Ensure that any new tax code forms P9(T) are received and correctly implemented. (gov.uk)
- For employees without a new code by 6 April, continue using the existing code from tax year 2025/26—without carrying over week-1 or month-1 markings. (gov.uk)
- New hires between 6 April and 24 May should use their P45 if they have one. Otherwise, follow standard procedures for PAYE registration. (gov.uk)
What Employees Should Know
Employees need to stay informed, especially if their tax situation has changed:
- Keep an eye out for P9(T) codes sent by HMRC. These determine your tax band and prefix codes. (gov.uk)
- If you leave your job before 6 April 2026 but receive payments after, your tax code remains unchanged for those earnings. (gov.uk)
- Emergency code 1257L means standard personal allowance and basic rates apply until your proper code arrives. (gov.uk)
Examples in Practice
- Scenario A: Jane’s employer hasn’t received her new tax code by April. They will continue to apply her last known code (e.g., 1257L) until a new P9(T) arrives. No week-1/month-1 adjustments.
- Scenario B: Bob starts a job on 1 May and provides his previous P45. His employer should use the P45 information to set up the correct tax code under PAYE.
Action Steps Checklist
| Task | Employer | Employee |
|---|---|---|
| Review payroll software for 2026/27 | ✅ | |
| Identify employees with missing tax codes | ✅ | |
| Make sure correct prefixes are applied | ✅ | |
| Confirm receipt of P9(T) where applicable | ✅ | ⚠️ check it |
| Know your emergency code if you haven’t got your tax code | ✅ know 1257L |
Implications Going Forward
- With personal allowance frozen through 2028, more taxpayers may be pushed into higher bands if incomes rise with inflation. Staying tax code-aware is increasingly important. (gov.uk)
- Employers who fail to use correct tax codes may face compliance issues or penalties.
Bottom line: The P9X guidance makes clear that tax codes must be updated for the new tax year. Employers and employees should act proactively to ensure smooth transition and avoid surprises.