Most business owners don’t spend much time thinking about their tax code.
And that’s understandable. It usually sits quietly in the background while PAYE does its job. But every now and then HMRC makes changes that can affect how much tax you pay through your salary or pension.
With the new tax year approaching, HMRC is reviewing some of the reliefs included in tax codes.
That’s exactly what appears to be happening for the 2026/27 tax year.
HMRC has started reviewing certain reliefs that have been included in tax codes for several years. As a result, some taxpayers may see adjustments to their coding notices from April 2026.
For many people this will relate to employment expenses and Gift Aid relief.
Why HMRC Is Reviewing Tax Codes
It looks like HMRC is focusing on reliefs that have simply rolled forward year after year without being reviewed.
In some cases that relief may still be valid. In others, circumstances may have changed.
HMRC appears to be removing certain reliefs where:
• The claim has stayed the same for several years
• There has been no recent self-assessment activity
• Their data suggests the claim may no longer apply
From HMRC’s perspective, it is about making sure tax codes reflect a taxpayer’s current position rather than something that was claimed years ago.
But the important point is this.
The change might be correct.
Or it might not.
Employment Expenses and Working From Home
One area that could affect directors and team members is employment expenses.
These are costs incurred personally while carrying out work duties. Historically this has included things such as:
• Professional subscriptions
• Mileage or travel costs not reimbursed by the company
• Working from home expenses
If these expenses were coded into your tax code previously, HMRC may now remove them if there has been a gap in employment or no recent confirmation of the claim.
You may also have seen our recent blog on home working relief, as recent Budget changes mean that tax relief for working from home is being withdrawn in many situations. As a result, some of these claims may disappear from tax codes altogether.
If the expense is still valid, it simply means it may need to be reclaimed again through HMRC or via a self-assessment return.
Gift Aid Higher Rate Relief
Higher rate taxpayers often claim additional relief on Gift Aid donations.
Sometimes this relief is included directly in a tax code rather than being claimed each year through self-assessment.
HMRC is now reviewing cases where:
• The same donation amount has been coded for several years
• There has been no recent tax return submitted
If that applies, the Gift Aid relief may be removed from the tax code for 2026/27.
Again, this does not necessarily mean the relief is no longer available. It may simply mean HMRC wants the claim to be actively confirmed rather than automatically carried forward.
The Simple Lesson: Check Your Tax Code
There’s a simple takeaway from all of this.
Always check your tax code.
Many people assume it must be correct because it comes from HMRC. In reality, tax codes are based on the information HMRC holds at the time. If that information is outdated or incomplete, the code may be wrong.
And that can work both ways.
Sometimes people end up paying too much tax.
Other times they underpay without realising it.
Neither situation is ideal.
A quick review can often spot issues early and avoid problems later.
With the end of the tax year approaching, it’s also a good time to review your wider tax position. In another recent blog we talked about why you should not waste your allowances before 05 April 2026, as many reliefs and allowances reset when the new tax year begins.
Checking your tax code is another simple step that can help make sure you are not paying more tax than you need to.
Need Help Checking Yours?
If you haven’t checked your tax code recently, contact GreenStones on 01733371180 and we’ll review it with you.
A quick conversation now could save you unnecessary tax or help avoid an unexpected bill later.