UK PAYROLL

UK overtime pay, explained.

Take an extra shift and want to know what actually lands in your account? See how PAYE, NI, student loan and pension affect your overtime hour by hour.

To check whether the tax, NI and PAYE lines look right on your own slip, see How do I check my payslip is correct?.

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Educational estimates only. Not tax, legal, financial, payroll or employment advice. Verify with your employer's payroll team or HMRC.

What your overtime actually adds

Enter one month's normal gross pay and the overtime you worked. The figures below use the 2026/27 PAYE bands, Class 1 National Insurance and student-loan thresholds. Estimates only — check your own payslip and ask payroll if the two disagree.

What the overtime adds to this month's take-home pay
Overtime gross	£180.00
Income tax on it	−£36.00
National Insurance on it	−£14.40
What lands in your account	£129.60

You keep 72p of every pound of this overtime. Your normal month's net pay of about £2,093.34 becomes about £2,222.94.

Why the tax and the NI behave differently. Income tax is cumulative: PAYE recalculates the whole year every period, so if a heavy month takes too much, a quiet one gives it back. The figure above is what the overtime costs you once the year has settled. National Insurance is not cumulative. It is worked out on each period on its own and never reconciled, so the NI on a spike stays paid.

Student loan works like NI. The plan threshold is applied per pay period, so a big month can trigger a deduction even in a year when your total pay stays under the annual threshold. HMRC rounds each period's deduction down to a whole pound, so your payslip may be a few pence below the figure here.

Pension is not modelled. If your scheme takes a percentage of total pay rather than basic pay, your contribution will rise with the overtime too, which reduces take-home further but also reduces the tax. See the pension calculator for that part.

Common questions

Is overtime taxed at a higher rate?

No. Overtime is taxed at your marginal rate, the same as the rest of your pay. It can feel higher because the extra income may push you into the next tax band for that period, or trigger a larger student loan / NI deduction. Annually it averages out at your normal rate.

How is time-and-a-half calculated?

Time-and-a-half is your normal hourly rate multiplied by 1.5. For example at £15/hour, an overtime hour pays £22.50 gross. Apply your marginal income tax rate (20 or 40 percent), NI (8 or 2 percent), and any student loan or pension to see what lands.

Why does £200 of overtime not give me £200?

Three deductions come off the extra pay at your marginal rates, not your average rate. For a basic-rate taxpayer that is 20 percent income tax and 8 percent National Insurance, so £200 of overtime lands as about £144. Add a 9 percent student loan and it is about £126. The calculator on this page works out your own figure from your hourly rate, your hours and your tax code.

Will overtime affect my tax code?

Generally no. Tax codes change based on your full-year income forecast, not on a single overtime month. If your overtime is regular and pushes you into higher rate territory year-round, HMRC may eventually adjust your code, but a one-off month should not.

Does overtime count for pension auto-enrolment?

It depends on your employer's definition of qualifying earnings. Most schemes include overtime up to the £50,270 upper limit. Check your scheme rules; if overtime is excluded, your pension contribution stays flat regardless of overtime.

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PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, payroll, accounting, pension, benefits or employment advice. Always verify your payslip, tax code, deductions and take-home pay with your employer's payroll department, HMRC, your pension provider, a qualified accountant, tax adviser or another appropriately qualified professional.