What happens each payday
Your employer's payroll software uses your tax code and pay to date to work out how much tax is due. It reports each payment to HMRC in real time, then pays the tax over monthly or quarterly.
Cumulative coding
Under a normal code, payroll looks at your total pay and tax so far this year. If you had an unusually high month, later months catch up. If you start a job midway through the year after a period without work, you'll often pay little or no tax at first, because you have unused allowance from earlier months.
Example: joining in October
Priya starts a £36,000 job in October after six months travelling. By her first payday, she's entitled to seven months of allowance (about £7,332) but has only earned £3,000. Her first payslip shows no Income Tax at all. By March, cumulative coding brings her tax into line.
When PAYE gets it wrong
Common causes are emergency codes, two jobs, a change in benefits, or HMRC having an out-of-date estimate of your income. Check your Personal Tax Account, and contact HMRC if the code looks wrong.
Check the deduction before the net pay
A change in net pay could come from tax, NI, pension or another deduction. Compare those lines individually so a PAYE query is not confused with a change elsewhere on the payslip.
Try it with your own numbers
Estimate PAYE Income Tax and NI using your own tax code for 2026/27.
Frequently asked questions
Does PAYE include student loans?
Yes. Student loan and postgraduate loan repayments are collected through payroll.
Check it on GOV.UK: Repaying your student loan (opens GOV.UK in a new tab)
Sources
Tax year 2026/27. Check these official sources for current rules and deadlines.
Related calculators
- PAYE Calculator — Estimate PAYE Income Tax and NI using your own tax code for 2026/27.
Related guides
- Tax Codes Explained — What your tax code means, from 1257L to K codes, BR, D0, NT and emergency codes, and what to do if yours looks wrong.
- How to Read a UK Payslip — Understand every line on a UK payslip: gross pay, tax code, NI letter, pension, student loan, year-to-date figures and net pay.
- What Is a P45? — What a P45 is, when you get one, which parts to give a new employer, and what happens if you don't have one.