Answers to common questions about UK tax, deductions, and your net salary
Below you will find answers to the most frequently asked questions about take-home pay in the United Kingdom. For a detailed explanation of how your salary is taxed, see our complete take-home pay guide, or use our calculator to work out your net pay instantly.
Emergency tax is applied when HMRC does not have enough information to give you the correct tax code. This typically happens when you start a new job and your employer has not yet received your P45 from your previous employer, or when HMRC has not issued a tax code in time.
Under emergency tax, you are usually given the standard personal allowance but taxed on a non-cumulative basis (shown as W1 or M1 on your payslip). This means each pay period is treated independently, without accounting for any under- or over-payment of tax from earlier in the year. As a result, you may pay more tax than you should.
Emergency tax is usually resolved automatically within a few weeks once your employer receives your correct tax code from HMRC. Any overpayment will be refunded through your pay. If it is not corrected within two to three months, contact HMRC directly.
If you believe your tax code is incorrect, you should check it against what you expect based on your personal circumstances. The standard code for someone with no complications is 1257L for 2025/26. Your code might differ if you have benefits in kind, underpaid tax from a previous year, or other adjustments.
To query your tax code, you can:
If HMRC agrees your code is wrong, they will issue a corrected code to your employer, and any overpaid tax will be refunded through your subsequent pay packets.
Marriage Allowance allows a spouse or civil partner who earns less than the personal allowance (£12,570) to transfer up to £1,260 of their unused allowance to their partner. The partner receiving the transfer must be a basic rate taxpayer (earning no more than £50,270).
The transfer saves the higher-earning partner up to £252 per year in income tax. You can apply online through the HMRC website, and the claim can be backdated for up to four previous tax years, potentially saving you over £1,000 in total.
The childcare voucher scheme closed to new entrants in October 2018, but employees who were already registered can continue to use the scheme with their current employer. If you are still on the scheme, childcare vouchers are provided through salary sacrifice, which reduces your gross pay before tax and NI are calculated.
You can receive up to £243 per month in childcare vouchers tax-free if you are a basic rate taxpayer (£124 for higher rate, £110 for additional rate). The replacement scheme, Tax-Free Childcare, provides a government top-up of 20p for every 80p you pay, up to £2,000 per child per year (£4,000 for disabled children). You cannot use both schemes simultaneously.
Overtime is taxed in exactly the same way as your regular salary — there is no special "overtime tax." However, overtime payments can push your total earnings for that pay period into a higher tax band, which means you may see a higher percentage deducted from your overtime earnings.
For example, if your regular monthly salary puts you just below the higher rate threshold and your overtime pushes you above it, the overtime earnings that fall into the higher rate band will be taxed at 40% rather than 20%. This can make it feel as though overtime is taxed more heavily, but it is simply the progressive tax system at work. Your total tax bill for the year will be the same regardless of how your earnings are distributed across pay periods.
Bonuses are taxed as part of your normal income, not at a separate "bonus tax rate." However, because a bonus is typically paid in a single lump sum on top of your regular salary, it can push a significant amount of income into a higher tax band for that pay period.
Your employer calculates tax on each pay period, so if your bonus is paid in one month, the PAYE system may assume you are earning at that level for the entire year and tax accordingly. This can result in an apparent overtaxation. The good news is that the cumulative nature of PAYE means any overpayment is usually corrected in subsequent months, and your total tax for the year should be accurate.
If you reach the end of the tax year and have overpaid, you will receive a refund either through your pay or by claiming from HMRC.
If you have two jobs, your personal allowance is applied to your main employment (usually the one that pays the most). Your second job will typically be given a BR tax code, meaning all earnings from that job are taxed at 20% from the first pound, with no personal allowance.
If your combined earnings from both jobs push you into the higher rate band, HMRC should adjust your tax codes accordingly to ensure you pay the correct amount overall. You can split your personal allowance between jobs by contacting HMRC, which may be beneficial if both jobs pay a similar amount.
Scotland has its own income tax rates, which differ from the rest of the UK. Scottish taxpayers have more tax bands (six compared to three in England, Wales, and Northern Ireland), with a starter rate of 19% and a top rate of 48%. Whether you pay Scottish or rUK tax depends on where you live, not where you work.
If you live in Scotland, your tax code will begin with an "S" (for example, S1257L). Scottish taxpayers on lower incomes generally pay slightly less tax, whilst higher earners pay more compared to their counterparts elsewhere in the UK. National Insurance rates are the same across the whole of the United Kingdom.
If you move between Scotland and another part of the UK, you should update your address with HMRC to ensure you are on the correct tax regime.
Under automatic enrolment, your employer must enrol you into a workplace pension scheme if you are aged between 22 and State Pension age, earn at least £10,000 per year, and work in the UK. The minimum contributions are 5% from the employee and 3% from the employer, totalling 8% of qualifying earnings.
Qualifying earnings are your earnings between £6,240 and £50,270 per year. So if you earn £30,000, your qualifying earnings are £23,760, and your minimum 5% contribution would be approximately £1,188 per year (£99 per month).
You can opt out of auto-enrolment, but your employer will re-enrol you every three years. Given the tax relief and employer contributions, opting out means giving up free money, so it is generally not advisable unless you have specific financial reasons for doing so.
You may be owed a tax refund if you have overpaid income tax during the year. Common reasons include being on an emergency tax code, leaving a job mid-year, or having incorrect tax codes applied. There are several ways to claim:
A P60 is a summary of your total pay and deductions for the tax year. Your employer must give you a P60 by 31 May after the end of each tax year (5 April). It shows your total earnings, the tax and NI you have paid, and your tax code. You should keep your P60 safe as you may need it for mortgage applications, tax credit renewals, or self-assessment returns.
A P45 is issued when you leave a job. It shows your total pay and tax deducted up to the date you left. You should give Parts 2 and 3 of your P45 to your new employer so they can apply the correct tax code. If you do not provide a P45, your new employer may put you on an emergency tax code until HMRC sorts out your records.
If you have lost your P60 or P45, your employer may be able to provide a replacement, or you can find the information through your Personal Tax Account on the HMRC website.
When you change jobs during the tax year, your P45 from your old employer tells your new employer how much you have already earned and how much tax you have paid. This allows the new employer to continue taxing you on a cumulative basis, ensuring you do not over- or under-pay tax for the year.
If you do not have a P45 (for example, if it is your first job or you have lost it), your new employer will ask you to complete a Starter Checklist (formerly P46). Depending on your answers, they will apply either the standard tax code on a cumulative basis, or an emergency tax code on a Week 1/Month 1 basis until HMRC confirms your correct code.
In most cases, any discrepancies are resolved within a few pay periods once HMRC updates your records. If you notice you are being overtaxed for more than two months after starting a new job, contact HMRC to check your tax code.
Yes. Salary sacrifice involves agreeing with your employer to reduce your contractual salary in exchange for a non-cash benefit. Because your official salary is lower, you pay less income tax and National Insurance. Common salary sacrifice arrangements include increased pension contributions, Cycle to Work schemes, electric vehicle leases, and technology purchases.
The savings can be significant. For example, a higher rate taxpayer sacrificing £5,000 of salary into their pension saves £2,000 in income tax and £100 in National Insurance, whilst still benefiting from the pension contribution. However, salary sacrifice does reduce your official salary, which may affect mortgage eligibility, statutory pay entitlements (such as maternity pay), and some benefits calculations. It is worth discussing the implications with your employer's HR team before agreeing to any sacrifice arrangement.