Starting Your First Job in the UK: A Complete Tax Guide for 2025-26
Starting your first job is exciting — but the first payslip can be confusing. Suddenly there are deductions for income tax, National Insurance, and possibly a student loan repayment, and you have been given a tax code that looks like a government classification system. This guide explains what all of it means and what to do if something looks wrong.
The Starter Checklist: your first tax form
If you do not have a P45 from a previous job (you won't if it really is your first), your employer will ask you to complete a Starter Checklist (previously called a P46). This tells your employer which tax code to use until HMRC issues a formal one. You will be asked to confirm which statement applies to you:
- Statement A: This is your first job since 6 April and you have not been receiving taxable benefits, a state pension, or a student loan. → Tax code: 1257L (cumulative).
- Statement B: This is your only job but you have had another job since 6 April or received taxable benefits. → Tax code: 1257L W1/M1 (non-cumulative, emergency basis).
- Statement C: You have another job or pension. → Tax code: BR (all income taxed at 20%).
If you choose Statement A and you have genuinely not worked before in this tax year, you will have the full Personal Allowance available from the start — meaning no income tax until your cumulative pay exceeds £12,570 for the year.
Your tax code
The most common tax code for a first job is 1257L. The number (1257) multiplied by ten equals your tax-free Personal Allowance (£12,570). The L suffix means you have the standard allowance. If you have the emergency W1/M1 version, your employer treats each pay period independently rather than cumulatively — which can result in overpaying tax early in the year. Once HMRC issues your correct cumulative code, any overpaid tax is refunded through payroll.
When do you start paying income tax?
Income tax only starts when your annual earnings exceed the Personal Allowance of £12,570. If you start work in April 2025 earning £25,000, your monthly pay is approximately £2,083. Your cumulative income by month one is £2,083 — well within the tax-free amount. Tax gradually kicks in as the year progresses and cumulative earnings exceed £12,570 (around September or October depending on your salary level).
National Insurance Contributions
National Insurance is separate from income tax. In 2025-26:
- You pay 0% on earnings up to £12,570 per year (£1,047.50/month).
- You pay 8% on earnings between £12,570 and £50,270 per year.
- You pay 2% on earnings above £50,270 per year.
NI contributions count toward your entitlement to the State Pension and certain other benefits. You start building your NI record from your first job. You need 35 qualifying years for the full New State Pension (£221.20/week in 2025-26).
Reading your payslip
A typical payslip shows:
| Line item | What it means |
|---|---|
| Gross pay | Your total earnings before any deductions |
| Income tax | Tax deducted via PAYE |
| National Insurance | Employee NICs deducted |
| Student loan | Repayment if applicable |
| Pension | Auto-enrolment or salary sacrifice contribution |
| Net pay | What lands in your bank account |
| Tax code | The code your employer is using to calculate your tax |
| NI number | Your unique National Insurance reference |
P45 and P60: documents you will encounter
P45: Issued by an employer when you leave. It shows your total pay and tax deducted in the tax year up to your leaving date. Give it to your next employer so they use the right tax code and do not overtax you.
P60: Issued by your employer at the end of each tax year (by 31 May). It summarises your total pay and tax for the full year. Keep this document — you may need it to claim a tax refund, apply for a mortgage, or complete a Self Assessment return.
Auto-enrolment pension
If you are aged 22 or over and earn more than £10,000 per year, your employer must automatically enrol you in a workplace pension. The minimum employer contribution is 3%, and the minimum employee contribution is 5% (total 8%). You will see this on your payslip. You can opt out, but doing so means losing the employer contribution — which is effectively free money.
Student loan repayments
If you have a student loan, repayments are deducted automatically via PAYE once your income crosses the threshold for your plan:
- Plan 1 (pre-September 2012 starters): repayments begin at £24,990/year (2025-26).
- Plan 2 (post-September 2012): threshold is £27,295/year.
- Plan 5 (new students from 2023): threshold is £25,000/year.
You repay 9% of income above the threshold. Repayments are automatic once your employer has your plan type — ensure you tell them via the Starter Checklist.
Frequently asked questions
I have been emergency taxed on my first payslip. Will I get a refund?
Probably yes. Emergency tax codes (W1/M1) often result in overpaying initially. Once your employer receives your correct cumulative tax code from HMRC — usually within a few weeks — any overpaid tax is automatically refunded through your next payslip. If the tax year ends before this happens, HMRC will issue a P800 refund notice after the year end.
Do I need to do a Self Assessment return for my first job?
No, if PAYE is your only income. PAYE is designed to collect the right amount of tax automatically. You only need to file Self Assessment if you have other income (self-employment, rental income, capital gains above £3,000), if you earn over £100,000, or if you have claimed certain reliefs or benefits. Most first-time employees will never need to do a tax return.
Can I work two jobs?
Yes. Your second job will typically use a BR tax code (all earnings at 20%), as your Personal Allowance will already be allocated to your main job. If the combined income from both jobs is unlikely to make you a higher rate taxpayer, you will not overpay significantly. If you think your second employer is using the wrong code, contact HMRC to reallocate.