Answers · UK 2025/26

How much of my overtime do I actually keep in 2026/27?

Overtime is taxed at your normal marginal rate, not a special higher rate. A basic-rate taxpayer keeps about 72% of overtime after 20% tax and 8% National Insurance. A higher-rate taxpayer keeps about 58% after 40% tax and 2% National Insurance. Student loans reduce this further.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

Full answer

There is a common myth that overtime is taxed at a special, higher rate, but this is not true. Overtime pay is added to your normal earnings and taxed at exactly the same marginal rates as the rest of your income for 2026/27. What you keep simply depends on which tax band the extra pay falls into. If you are a basic-rate taxpayer, meaning your total income stays below £50,270, your overtime is taxed at 20% Income Tax and 8% National Insurance, so you keep about 72p of every extra £1, or roughly £72 of every £100 of overtime. If the overtime pushes you, or you already are, into the higher-rate band above £50,270, that portion is taxed at 40% Income Tax but only 2% National Insurance, so you keep about 58p in the pound. The reason overtime can feel more heavily taxed is that a one-off large payment in a single month can temporarily push your pay into a higher band under the PAYE system, but this usually evens out over the year. On top of tax and National Insurance, a student loan deducts 9% of the overtime if your total pay is above the relevant threshold, and pension contributions may also apply. A particular trap is the £100,000 to £125,140 band, where the Personal Allowance is withdrawn and overtime can be effectively taxed at 60%. For most workers, though, overtime is well worth doing because you still keep the majority of it. Use a take-home pay calculator to enter your salary plus expected overtime and see exactly what you would keep.