Answers · UK 2025/26
How is overtime taxed in the UK?
Overtime is taxed at your normal marginal rate — there is no special "overtime tax". A basic-rate worker keeps about 72% of overtime pay (20% tax + 8% NI), while a higher-rate worker keeps 58% (40% + 2% NI) for 2026/27.
Full answer
There is no separate overtime tax in the UK; overtime is simply added to your regular pay and taxed at your marginal rate for 2026/27. The myth that overtime is taxed more harshly arises because a busy month can push a slice of pay temporarily into a higher band, or because monthly PAYE assumes the higher earnings will continue all year. Worked example: a basic-rate employee earning £30,000 does £500 of overtime in a month. After 20% Income Tax and 8% National Insurance, they keep 72% of it, so net overtime is about £500 × 0.72 = £360. A higher-rate employee on £60,000 doing the same £500 of overtime keeps only 60% after 40% tax and 98% after 2% NI, netting about £500 × 0.58 = £290. If overtime briefly tips you over £50,270, only the portion above that point is taxed at 40%, and PAYE usually corrects itself over the year so you are not overtaxed overall. In Scotland the marginal rates differ (for example 42% in the higher band), changing the net figure. Use the Take-Home Pay calculator to see how an extra block of overtime affects your monthly net pay.
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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.