Income Tax Changes

6EQUJ5

Hello

New to the forum here, apologies if I've posted in the wrong area.

I recently started a new job where my salary has significantly increased. My first and second payslips had slightly differing net pay however my latest payslip (April 2025) states a significantly lower net pay. 

The income tax has significantly gone up. I've noticed that the YTD values have dropped, but this is probably because of the new tax year starting.

The issue is that I don't understand why the income tax has suddenly increased, assuming this is the new norm why did I previously pay a relatively smaller amount? Is this a normal occurrence? Tax code, 1257L, has remained the same.

Appreciate any advice. Thank you.

DE_612183

Depends on your earning last year - you can earn 12700 before paying tax, so perhaps you had more allowance last year, and now you are facing paying the correct tax each month rather than a reduced amount for the last two months.

Try putting your annual salary in a calculator and see what comes out...https://www.thesalarycalculator.co.uk/

Also what is your tax code on your latest pay slip?

molerat

Without actual figures it is hard to say but tax looks at the whole year as it goes along so what happened earlier in the year can have an effect on later pay packets.  There is also the possibility of tax codes being incorrectly applied on change of job.

6EQUJ5

DE_612183 said:

Depends on your earning last year - you can earn 12700 before paying tax, so perhaps you had more allowance last year, and now you are facing paying the correct tax each month rather than a reduced amount for the last two months.

Try putting your annual salary in a calculator and see what comes out...www.thesalarycalculator(dot)co(dot)uk

Also what is your tax code on your latest pay slip?

Thanks for the response. Tax code is, and AFAIK has always been 1257L, even for previous jobs.

I was previously on £35K (no overtime), so I assume I exhausted the £12.7k allowance for the last tax year. 

Based on the salary calculator, what I'm paid now seems to check out, acknowledging the benefits/pension etc. Suppose I'll have to get used to it.

I'm struggling to understand how the allowance is reached. Is it the monthly gross salary that fills the allowance until it is reached? For example gross monthly pay £3K then theoretically the threshold is reached after month four? Or is it balanced through it the year?

DE_612183

6EQUJ5 said:

DE_612183 said:

Depends on your earning last year - you can earn 12700 before paying tax, so perhaps you had more allowance last year, and now you are facing paying the correct tax each month rather than a reduced amount for the last two months.

Try putting your annual salary in a calculator and see what comes out...www.thesalarycalculator(dot)co(dot)uk

Also what is your tax code on your latest pay slip?

Thanks for the response. Tax code is, and AFAIK has always been 1257L, even for previous jobs.

I was previously on £35K (no overtime), so I assume I exhausted the £12.7k allowance for the last tax year. 

Based on the salary calculator, what I'm paid now seems to check out, acknowledging the benefits/pension etc. Suppose I'll have to get used to it.

I'm struggling to understand how the allowance is reached. Is it the monthly gross salary that fills the allowance until it is reached? For example gross monthly pay £3K then theoretically the threshold is reached after month four? Or is it balanced through it the year?

Normally your payroll will split the allowance by 12 apply that 1/12th each month - however that's not always the case - depends on the employer and your contract.

Don't forget you also pay NI and you may have pension deductions either before or after tax which can also change things ( not forgetting the dreaded student loan if that applies ).

Sarahspangles

If your previous payslips were February and March 2025, and you had a gap between jobs in January, you would have had some unused 2024/25 allowance to go at.

It’s common to have ups and downs at the beginning of a new job. Say your first payslip covers 5 or 6 weeks because you miss the first payroll run, and they tax you on an emergency tax code. Then the next payslip has the correct tax code, but there are some arrears of tax to pay/refund. By month 3 it will settle down.

While they’re to hand, check they’re getting your pension contributions right

sheramber

You get 1/12 of your personal Allowance and 1/12 of the basic rate band each month. 

If you receive taxable benefit in your new job that counts as extra income to be taxed. 

chrisbur

6EQUJ5 said:

DE_612183 said:

Depends on your earning last year - you can earn 12700 before paying tax, so perhaps you had more allowance last year, and now you are facing paying the correct tax each month rather than a reduced amount for the last two months.

Try putting your annual salary in a calculator and see what comes out...www.thesalarycalculator(dot)co(dot)uk

Also what is your tax code on your latest pay slip?

I'm struggling to understand how the allowance is reached. Is it the monthly gross salary that fills the allowance until it is reached? For example gross monthly pay £3K then theoretically the threshold is reached after month four? Or is it balanced through it the year?

The allowance figure is for the full tax year and most people will be on a cumulative tax code which means that each month (if monthly paid) your allowance increases by 1/12 of that annual figure.
So month 1 you get 1/12 of your allowance for paying no tax 1/12 of your allowance for paying 20%  1/12 of your allowance for paying 40% etc., Using these allowances against your taxable gross your tax due is calculated.
Month 2 you now get 2/12 of these allowances and they are set against your total taxable gross for months 1 and 2 added together to get a tax due figure as at month 2.  Tax paid for month 1 is deducted from that to get tax due for month 2.  
Month 3 you now get 3/12 of these allowances and they are set against your total taxable gross for months 1 2 and 3 added together to get a tax due figure as at month 3. Tax paid for months 1 and 2 is deducted from that to get the tax figure due for month 3.
Month 4   4/12 of allowances against taxable gross for months 1 2 3 and 4 to get tax due as at month 4 deduct tax paid for months 1 2 and 3 to get tax due for month 4

and so on month by month until you get to month 12 when you get your full annual allowances set against your full years taxable gross to get tax due at the year end from which the last 11 monthd is deducted to get your tax for month 12.

In this way your tax is always based on your earnings for the tax year so far so if your earnings vary so that you move between tax bands the tax you pay is automatically adjusted by the PAYE system.  For example you get a decent bonus early in the tax year and as a result some tax at 40% is deducted , next month your earnings go back to normal your tax figure will be reduced as some or all of that 40% tax is converted to 20% tax.  Or say you miss a month when you change jobs this will result in some unused allowances which will be used to reduce tax in your next job when your P45 details are applied.