Salary Guide · Updated 2026
Starting Your First Job in the UK: 2026 Tax & Money Guide
Your first payslip can be confusing — tax codes, National Insurance, pension deductions, and student loan repayments all show up at once. This guide explains exactly what's being deducted and why.
Understanding your tax code
Most first jobs use the standard tax code 1257L, reflecting the standard Personal Allowance of £12,570 (the amount you can earn before paying Income Tax). If your employer doesn't have your details from a P45 (from a previous job) or a starter checklist, you may be placed on an "emergency" tax code temporarily, which can overtax you in your first pay period — this usually corrects automatically once HMRC has your full details, or you can claim back any overpaid tax.
What comes off your payslip
Income Tax: 20% on earnings between £12,570 and £50,270 (basic rate), rising above that. National Insurance: 8% on earnings between £12,570 and £50,270 (2026/27 employee rate). Workplace pension: automatically enrolled if you're 22+ and earning over £10,000/year, with a minimum 5% employee contribution (often including tax relief) matched by at least 3% from your employer — 8% total minimum. Student loan repayments: automatically deducted once your income crosses the relevant plan threshold (see below) if you have a student loan.
Pension auto-enrolment: don't opt out without thinking it through
Auto-enrolment gives you free money — your employer's 3% minimum contribution is effectively part of your total compensation, and it comes on top of your 5% (which itself includes tax relief, so it costs you less than 5% of your take-home pay). Opting out immediately in your first job means giving up years of employer contributions and investment growth. If money is genuinely tight, it's worth checking whether you can reduce contributions to the statutory minimum rather than opting out entirely.
Student loan repayments
You only start repaying once your income crosses your plan's threshold: Plan 2 (most English/Welsh graduates 2012-2023) at £29,385, Plan 5 (English students starting from 2023) at £25,000, Plan 1 (older/Scottish loans predating Plan 4) at £26,900, Plan 4 (Scotland) at £33,795. Repayments are 9% of income above the threshold, deducted automatically through payroll alongside tax and NI — you don't need to do anything to start or stop repayments as your income changes.
Common first-job mistakes to avoid
Not checking your tax code is correct once your first few payslips arrive — an incorrect code can mean over- or under-paying tax for months. Opting out of your workplace pension without understanding you're giving up free employer money. Not keeping payslips and your P60 (issued at the end of each tax year) — you'll need these for things like mortgage applications, benefit claims, or checking you've paid the right tax. Ignoring "emergency tax" on your first payslip — it usually corrects itself, but it's worth confirming with payroll if it doesn't within 1-2 pay periods.