Self Assessment and Your Tax Code
If you are employed and self-employed, your tax code and Self Assessment work together. Your employer uses your tax code to deduct the right amount of PAYE. Self Assessment then handles the rest.
How Tax Codes Work
Your tax code tells your employer how much tax-free income to allocate to your salary. The standard code 1257L means you get £12,570 of tax-free income.
When Your Tax Code Matters for Self Assessment
If you owe small amounts of tax through Self Assessment (under £3,000), HMRC can collect it by adjusting your tax code for the following year. This is called coding out. Your employer deducts a bit more each month to cover the extra tax.
Checking Your Tax Code
If your tax code looks wrong (too low or too high), check it through your HMRC online account. An incorrect tax code means either too much or too little tax is being deducted from your salary, affecting your Self Assessment calculation.
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Tax & Compliance Specialists
Our tax specialists have decades of combined experience in UK sole trader and small business taxation, MTD compliance, and HMRC submissions. All content is reviewed against current HMRC guidance before publication and updated quarterly to reflect legislative changes.
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