That's good that you have a tax code, it means you've been set up for PAYE – 'Pay As You Earn' income tax, which should mean no tax owing (or overpaid) at the end of the tax year (5 April 2020).
Your tax code of 1250L indicates:
- the '1250' means your tax-free Personal Allowance for this employment is £12,500 – in other words, no Income Tax is payable on the first £12,500 you earn from this employment; and
- the 'L' means that this is the standard amount, not an individualised tax code, so it will be updated automatically if the Personal Allowance changes.
So far, so good.
What this means on a month-to-month basis is roughly as follows…
In your first paycheque, they do some projection based on the information in that paycheque to figure out what it looks like you are going to earn over the course of a year. Then they apply 20% income tax to what looks like the pro-rata amount over the £12,500 annual Personal Allowance.
Then, as you go on to the next month and the month after that, the projection for the year changes. So you are taxed accordingly.
You'll be paying the same rate of income tax, (in your case, the basic rate – 20%), but on a different proportion of your monthly earnings. By the end of the tax year you should have earned £12,500 tax-free and paid 20% on the amount above that.
The variability you’re seeing usually only happens when you start a new job in the middle of a tax year. When you are paid monthly starting in a new tax year (from 6 April onwards) the PAYE deductions are usually at a consistent level.
Incidentally, the variability in PAYE can also happen if/when you have a salary event such as a pay increase/decrease or a bonus, during the course of a year. Suppose your employer paid you a one-off additional £10k in one month – you may find that results in a much larger proportion of tax in that month, and may push you into a different rate bracket, if it raises your projected earnings for the year. But if the pay goes back to the 'regular' amount in following months, you'll get that back in stages as less tax is taken out to even it up again.
There are rarely anomalies with PAYE but if you find you've overpaid income tax at the end of the year, you can either claim a tax refund or wait for it to be sorted out by HMRC amending your tax code for the following year.