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April Questions and Answers
Newsletter issue – April 2026
Q: I've received a letter from HMRC stating I have a drop in my tax-free allowance, so my tax code will change from April. My salary has not increased this past tax year, so why the change?
A:HMRC sends updated tax codes throughout the year, not just at the start of the tax year. These updates reflect changes in personal circumstances, such as income shifts or savings interest earned. For you, it would appear to relate to the latter.
Banks report savings interest (outside ISAs) directly to HMRC. If your interest exceeds your Personal Savings Allowance, HMRC adjusts your tax code to collect the tax automatically.
Allowances depend on income:
£17,570 to £50,270 income - you can earn £1,000 savings interest tax-free
£50,270 to £125,000 income - you can earn £500 tax-free
£125,000+ income - you cannot earn any interest tax-free
Q: I'm in receipt of an NHS pension, contribute to a private pension and think I've become a higher rate taxpayer. I've never done a tax return before - how do I claim the tax relief please?
A: It is important to note that your two pension schemes work in different ways.
The NHS pension scheme uses 'Net Pay', whereby contributions are taken before income tax is calculated. This means the person automatically receives full tax relief, including higher-rate relief if they qualify.
A private personal pension uses 'Relief at Source' which means contributions are made from after-tax income. The provider adds basic-rate relief (20%) automatically. If the person is a higher-rate taxpayer, they may be entitled to additional relief, which must be claimed by completing a self-assessment tax return.
Please get in touch if you would like us to assist you further with this.
Q: As the end of the tax year approaches, what should I check to maximise my tax allowances?
A: Many tax allowances reset on the 6th of April each year. If they are not used up before the reset, they can be lost forever. It is worth reviewing your options throughout the year and not leaving it to the last minute.
I'm sure you're aware that you can put up to £20,000 into an ISA each tax year, but it's worth checking how much of that allowance you've used.
A much-overlooked area is that of pension contributions, as these can reduce taxable income. Most people can invest up to £60,000 a year and receive tax relief.
If you are married, or in a civil partnership, with one of you a basic rate taxpayer and the other a non-taxpayer, the latter can transfer part of their personal allowance to the former.
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