Compliance
Understanding the New Tax Codes for 2026/27: What Employers and Employees Need to Know
From 6 April 2026 major changes to tax codes will affect every PAYE employer and employee in the UK — here’s your guide to the new rules and how to prepare.
By NomadicTax Research Team • 5-8 min read • February 20, 2026
## 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- **Emergency tax code 1257L** will apply uniformly across all employees until proper tax codes are issued. ([gov.uk](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- **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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
## 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- Ensure that any new tax code forms **P9(T)** are received and correctly implemented. ([gov.uk](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
## 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- If you leave your job before 6 April 2026 but receive payments after, your tax code remains unchanged for those earnings. ([gov.uk](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- Emergency code 1257L means standard personal allowance and basic rates apply until your proper code arrives. ([gov.uk](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
## 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](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
- Employers who fail to use correct tax codes may face compliance issues or penalties.
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**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.