Overtime tax checker (UK)

The problem

A common complaint: "I worked two extra shifts but barely saw any of the money." Variable pay sits on top of your normal earnings, so it is the marginal rates of tax, NI and (sometimes) student loan that apply - not your blended average rate.

On top of that, a one-off spike can briefly push you into a higher band, even if your annual income stays well within basic rate. Cumulative PAYE smooths this out over the year, but it can sting in the period the spike happens.

Plain-English explanation

When extra pay arrives in a single period, three layers stack on top of your normal deductions:

• PAYE at your marginal rate - 20%, 40% or 45% in England/Wales/NI; up to 48% in Scotland.
• Class 1 NI - 8% above the primary threshold, then 2% above the upper earnings limit (UEL).
• Student loan - 9% (or 6% PGL) on the portion above the period threshold.

For a basic-rate taxpayer with a Plan 5 student loan, an extra £100 of overtime is reduced by 20% PAYE + 8% NI + 9% SL = 37% combined. For a higher-rate taxpayer with Plan 5 and PGL, it is 40% + 2% + 9% + 6% = 57%.

Cumulative tax codes (the standard 1257L without M1/W1) self-correct: if a one-off spike pushed you into a higher band, the next quieter period will refund the difference automatically. Non-cumulative codes (M1, W1, X) do not - they treat each period in isolation and may over-tax permanently until the code changes.

Worked example - £500 of overtime on a basic-rate salary

Worked example uses 2026/27 UK figures and is illustrative. Do not use it as a personal tax calculation.

Step by step

1. 1

   Check your tax code basis

   A cumulative code (1257L without M1/W1) will smooth a spike across the year. A non-cumulative code (M1/W1/X) will not - speak to HMRC if your code is on the wrong basis.

2. 2

   Identify the marginal rates that apply

   Add the period's normal pay and overtime together. Compare to the period band thresholds (basic, higher, additional) to see which rates the overtime falls into.

3. 3

   Add NI

   NI is 8% above the primary threshold (£12,570 annualised for 2026/27) and 2% above the UEL (£50,270 annualised). For most overtime situations the 8% rate applies.

4. 4

   Add student loan if applicable

   9% above the plan threshold for plans 1/2/4/5; 6% above £21,000 for PGL. Both can stack on the same payslip.

5. 5

   Compare the result with your payslip

   Add the marginal deductions to your normal-period deductions. The total should match your payslip within rounding.

6. 6

   Run a free PayslipIQ check

   PayslipIQ will reconcile the period and explicitly call out which marginal rates were triggered.

What to ask payroll

• ?Is my tax code being applied on a cumulative or Month-1/Week-1 basis?
• ?Were my overtime hours paid at the correct premium rate (1.5×, 2× or other)?
• ?Are bonus or shift premium amounts being treated as taxable in the period received, or annualised?
• ?Have any taxable benefits been added to this period that I should be aware of?
• ?If I am over-taxed because of a non-cumulative code, when will the refund flow through?

When to contact HMRC

• If your code is on a non-cumulative (M1/W1/X) basis, speak to HMRC via the personal tax account or call 0300 200 3300 to request a switch back to cumulative.
• For one-off bonuses where over-taxation is permanent (i.e. annual income remains within basic rate but a single period crossed it), no HMRC action is needed under a cumulative code - the next period self-corrects.
• For very large bonuses in a single period that distort PAYE for the rest of the year, no escalation is needed - the cumulative system handles it.

FAQ

Why is my overtime taxed so much?

Overtime is taxed at your marginal rate, plus NI (8% for most people) and student loan (9% for plans 1/2/4/5, 6% for PGL). For a basic-rate taxpayer with a student loan, expect ~37% to be deducted from each pound of overtime.

Will I get the overtime tax back?

If your tax code is cumulative (1257L without M1/W1) and your annual income remains in the same band as expected, you will not get a refund - the deduction is correct. If a one-off spike pushed you into a higher band but your annual income did not, the cumulative system will refund the excess in subsequent periods automatically.

Do bonuses get taxed differently?

No, the rates are the same as for any pay. The reason a bonus often looks heavily taxed is that the spike pushes a single period into a higher marginal band, and NI and student loan stack on top.

Can salary sacrifice reduce overtime tax?

Salary sacrifice can reduce taxable pay and NI-able pay, but typically applies to fixed pay arrangements (pension, cycle-to-work) rather than spot overtime. Speak to your scheme administrator if you want to sacrifice a bonus.

Is my overtime tax wrong because I am on emergency tax?

Possibly. Emergency codes (M1, W1, X) treat each period in isolation. A spike under an emergency code can over-tax permanently until the code is corrected - see our wrong tax code checker.

Related checkers

• Wrong tax code checker →
• Emergency tax refund checker →
• Student loan deduction checker →
• Pension deduction checker →