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How to work out your tax if you are an employee? 

In this part of our starting work guides we look at

How are employees taxed?

Nearly every UK worker starts the payroll year with a tax free personal allowance.

For the 2019-20 tax year (tax years run 6 April to 5 April), the basic PAYE tax code is set at 1250L.

Tax codes have different suffixes to show different things, such as whether you are a Scottish taxpayer, or non-resident or on an emergency code, see What is the 2019/20 PAYE code? 

When you start work, your employer will ask you to complete a starter form and they can then use the information you provide to set your PAYE code for that employment.

Basic example

Freya does one job and she earns £15,000 per year, she is paid monthly.

Her gross monthly pay is £1,250

She is entitled to a full personal allowance of £12,000.

Her National Insurance Contributions 'NICsare calculated separately:

Her net pay is £1,136.28 (1,250-50-63.72).

If Freya took a second job, her tax free PAYE code would be allocated just one employment based on her earnings. She would then expect that her second job would deduct tax at 20%. For NICs the limit applies to each job. If she earns less than £166 per week in her second job there is no further NICs to pay. If she earns more than £166 per week in her second job she will have NICs calculated as above.

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How to calculate tax if you are self employed

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Special rules that determine whether you are employed or self employed