Self Assessment glossary

These short definitions follow official GOV.UK wording where we summarise a published rule. They are general information, not tax advice.

Tax year

In the United Kingdom a tax year runs from 6 April to 5 April the following year. The year being filed now is 2025/26 (6 April 2025 to 5 April 2026). The following tax year is 2026/27.

Self Assessment

The system HMRC uses to collect Income Tax and some National Insurance from people who cannot have all their tax collected through PAYE alone — for example many self-employed people, partners, and people with certain other untaxed income. You can file the return online for free on GOV.UK.

Personal Allowance

The amount of income a person can receive before paying Income Tax. For 2025/26 and 2026/27 it is £12,570. It is reduced by £1 for every £2 of income above £100,000, and it can fall to zero.

Payments on account

Two instalments towards next year’s bill, each usually half of last year’s relevant tax (including Class 4 National Insurance). They are due by midnight on 31 January and 31 July, unless last year’s tax was less than £1,000 or more than 80% of it was paid outside Self Assessment.

Balancing payment

The amount still owing for last year after payments on account already made, due by midnight on 31 January. Capital Gains Tax and student loan repayments sit on this payment, not in payments on account.

Class 2 National Insurance

A self-employed contribution. If profits are at or above the Small Profits Threshold, Class 2 is treated as paid (you do not pay a weekly amount). Below the threshold you can pay voluntarily. The official 2025/26 threshold is £6,845 and the weekly rate is £3.50; for 2026/27 they are £7,105 and £3.65.

Class 4 National Insurance

A self-employed contribution on profits above the Lower Profits Limit of £12,570, at 6% up to the Upper Profits Limit of £50,270 and 2% above that, in both 2025/26 and 2026/27.

Starting rate for savings

A 0% rate on up to £5,000 of savings income, after allowances. Taxable non-savings income reduces this band pound for pound. If taxable non-savings income is £5,000 or more, the starting rate is nil.

Personal Savings Allowance

A 0% amount of savings income: £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers in 2026/27 (Budget 2026 Annex A). Additional-rate taxpayers do not get this allowance. The 2025/26 income-tax rates table does not list it separately.

Dividend allowance

£500 in both 2025/26 and 2026/27. You pay tax only on dividend income above this allowance. Ordinary, upper and additional dividend rates then apply. The ordinary and upper rates rose in 2026/27.

Unique Taxpayer Reference (UTR)

The ten-digit reference HMRC issues when you register for Self Assessment. You need it to file online.