Answers · UK 2025/26
Do I pay tax on overtime UK?
Yes. Overtime is taxed exactly like normal salary — there is no special overtime tax. It is added to your gross pay for the pay period and runs through PAYE at your marginal rate (0%, 20%, 40% or 45%) plus 8% or 2% National Insurance.
Full answer
Overtime is treated as ordinary earnings under PAYE. HMRC does not apply a different code or rate to it. The reason overtime often feels heavily taxed is the way the cumulative PAYE system spreads tax-free allowances evenly across the year: a one-off overtime payment can push that pay period into a higher band, with NI taking another 8% (or 2% above £50,270). Example: a basic-rate worker earning £40,000 doing £500 of overtime pays £100 tax + £40 NI = £140, keeping £360. If the same person was already at the higher-rate threshold, they would pay £200 tax + £10 NI = £210, keeping only £290 (42% marginal). Overtime never causes long-term overpayment under cumulative coding — by year-end HMRC reconciles everything to the correct annual liability. A Week 1/Month 1 code or an emergency code can cause temporary over-deduction, refunded automatically once the cumulative code is restored. Salary sacrifice into pension is a common way to flatten the marginal hit on regular overtime earners.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.