Answers · UK 2025/26
How is overtime taxed in the UK?
Overtime pay is taxed exactly the same as regular salary — added to your gross pay and subject to PAYE at 20%, 40% or 45% Income Tax plus 8%/2% National Insurance. There is no separate or higher rate for overtime, but extra earnings can push you into a higher tax band.
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HMRC treats overtime, shift premiums, on-call payments and bank holiday rates as ordinary employment income. They are added to your gross taxable pay for the pay period and run through PAYE alongside your basic salary. The marginal Income Tax rate depends on annualised earnings: 20% up to £50,270, 40% to £125,140, 45% above. NI is 8% between £12,570 and £50,270, then 2%. Overtime in a single month can push that pay packet briefly into the higher-rate band, with PAYE rebalancing across subsequent months if it was a one-off. Examples: an employee on £35,000 doing £200 of overtime pays 20% Income Tax (£40) + 8% NI (£16) = £56 deductions, netting £144. The same £200 for someone on £55,000 attracts 40% Income Tax (£80) + 2% NI (£4) = £84 deductions, netting £116. Salary-sacrificing some basic pay or pension contributions can reduce the marginal rate.
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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.