UK tax for newcomers: PAYE, the personal allowance and what your payslip really says

The UK tax year runs 6 April to 5 April. Your personal allowance — the amount you can earn tax-free — is £12,570 for 2026/27. After that, 20% (basic), 40% (higher) and 45% (additional) bands kick in.

If you started work mid-year, HMRC may have put you on tax code 1257L W1/M1 (an ‘emergency’ non-cumulative code). It taxes each pay packet in isolation, so you often overpay. Once HMRC has a full P45 or starter checklist, you'll get the cumulative 1257L code and any overpayment refunded in the next payslip.

National Insurance is separate from income tax. Employees pay 8% on earnings between £12,570 and £50,270, then 2% above. It funds the State Pension and NHS — your Immigration Health Surcharge does not replace NI.

If you're on a Skilled Worker visa, you are tax-resident from the day you arrive in most cases (the Statutory Residence Test confirms it). Worldwide income may be taxable, but the remittance basis can apply for your first seven years if you're non-domiciled. Speak to a chartered accountant before your first Self Assessment.

Bottom line: your first three payslips will probably look wrong. Wait for the third before panicking — the system usually self-corrects through PAYE.