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I've started my first job on the 18th of August and got my first pay slip today (September+ part of August). I've noticed that the salary was tax free. I wonder if that's a mistake and there will be extra taxes taken in the future, or if I need to contact someone about that? For reference, my salary will be 26k per year during the first 3 months (probation period) and 27k after that. Can anyone help me understand a little more about how it works? Thank you so much!

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  • I'm not familiar with the UK's paperwork, but I had a similar issue with a job in the United States where it turned out that my W-4, the form used to indicate variances in taxing (primarily, listing of dependents, and any additional deduction that needs to be made), there was a smudge on the form that managed to trigger the system into thinking I'd claimed no tax should be deducted (basically, I was listed as tax-exempt). They had me fill out the form again, I made a make-up payment, and it was all resolved.
    – Sean Duggan
    Sep 28, 2022 at 12:41
  • You likely won't have met your tax-free allowance by April... So they're not taxing you. Be grateful, a lot of places would've just stuck you on an emergency tax code and you'd have to waittil April for a rebate
    – ScottishTapWater
    Sep 29, 2022 at 10:06
  • The opposite often used to be the case. I had a few jobs in the UK where my first salary payment was taxed using an Emergency Tax Code which resulted in a much bigger initial deduction. Of course it sorted itself out over the course of the tax year, but it was far from ideal.
    – Laconic Droid
    Sep 29, 2022 at 12:26

3 Answers 3

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Your employer won't start deducting tax until you have been paid enough money that you will owe tax.

British PAYE taxes are designed to deduct exactly the right amount of tax for the amount you have earned so far. The reasoning is that if you were to stop working immediately after a salary payment then exactly the right amount of tax will have been deducted and you won't need to file a tax return. The tax-free allowance for 2022/23 is £12,570, so until you have earned that you won't have any tax deducted.

It's possible that you will owe no taxes for this year.

You are only going to be making slightly more than that during the six months remaining in the tax year. My estimate of how much tax you will pay this year is around thirty pounds, all of which will be deducted in your last payslip of the tax year (end of March 2023). If your employer is making other deductions then you may end up being paid less than that, and your tax paid would then be zero. If so then enjoy - it won't happen again in future tax years. Your tax code will tell you how much deduction you are due. It should be printed on your payslip. See JayFor's answer for more details, or the other answer linked in the question comments.

You say in comments that you are paying National Insurance. That eliminates the possibility that your employer is filing to deduct taxes that they should.

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  • If the employer have not calculated the tax rate they should be deducting on a Month One basis
    – mmmmmm
    Sep 28, 2022 at 19:09
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    Ok thanks so much! Yes the NI was deducted from the payslip so no problem with that, as you said I'll be making slightly more than £12,570 by next April, so maybe they'll just start deducting something in the next few salaries I guess!
    – Maria
    Sep 28, 2022 at 21:32
  • Looking at the other answer linked in the comments on the question they may not start deducting tax until your total salary goes above the personal allowance.
    – DJClayworth
    Sep 28, 2022 at 21:45
  • "The tax-free allowance for 2022/23 is £12,570, so until you have earned that you won't have any tax deducted." This isn't quite right. Under PAYE the allowance is divided up monthly, but if you start working in the middle of the year then you'll have the allowance from the earlier months to use up too. If you stop working in the middle of the year you may well find you are owed a tax refund because you never got the benefit of the later months' allowance.
    – GS - Apologise to Monica ♦
    Sep 29, 2022 at 20:23
  • I don't think that's true. See the answer to the other question.
    – DJClayworth
    Sep 29, 2022 at 20:34
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As a supplement to DJClayworth's answer, I wanted to suggest checking your tax code. This should be printed on your payslip and is usually made up of four numbers and 1-3 letters.

There is a full guide to tax codes on HMRC's website, but basically:

  • The number represents your total tax-free personal allowance for the year. For standard taxpayers in England for the 2022-23 financial year this will be 1257 (i.e. £12570).
  • The letter refers to how your personal allowance is calculated. For standard taxpayers in England this will be L.

So if your tax code is 1257L, and you're not aware of any reason why you should be on a different tax rate, you don't have to do anything. Your employer will start taking deductions as and when they need to.

There are a number of reasons why you might have a different tax code (including if you live in Scotland or Wales), so don't panic if yours is different. Check the HRMC guide to tax codes and see if you can work out how it has been calculated.

If you think there is a mistake in how your tax has been calculated, HMRC also has an online form which you can use to work out your tax allowance and request changes:

Check your income tax for the current year.

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  • Ok brilliant, thanks! My tax code is indeed 1257L and it's stated on the payslip, the NI was deducted from the salary but no other taxes, so maybe they'll just start deduct them in the next few months!
    – Maria
    Sep 28, 2022 at 21:33
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In some of my jobs here in the UK, the employer did the math for me in the following way:

They calculated how much tax I should pay, per month, if I am employed 12 months. As I started not in the beginning of the tax year, they calculated how much extra tax (to return in the end of the fiscal year) I would have paid like this. They then deducted that from the first salaries until I "catched up". So maybe in month 3 of employment, I start paying normal taxes. Ends up the fiscal year with zero movement required from me or the HRMC.

Most universities in the UK seem to work like this, for example.

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  • Very curious - so the employer knows how much you've earned from other jobs during the year? Otherwise that risks being hit with having to pay a lot of extra tax at the end of the year.
    – Voo
    Sep 29, 2022 at 12:43
  • @Voo yes, I have been asked my salary and employment for the fiscal year that I join the employer.
    – Ander Biguri
    Sep 29, 2022 at 13:15
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    Ah ok that's less of a privacy issue and more a trade-off between convenience and privacy that everyone can decide for themselves. Not a bad system.
    – Voo
    Sep 29, 2022 at 13:22
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    @Voo In general, when you're starting a job with a new employer in the UK you'll either give them a P45 (which is a form you get when leaving a job, so will list all the money earned and tax paid in the year to date, allowing the new employer to work out your tax) or a Starter Checklist (which has a declaration as to whether you have any other jobs/income, as a result of which you'll either go on the Emergency Tax Code and pay the full amount of tax or on the 1257L code and get the full tax free allowance).
    – Showsni
    Sep 29, 2022 at 15:25

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