Tax on Overtime (UK)

When you work overtime, your gross pay increases for that pay period. This overtime pay is added to your regular salary and taxed at the same rates that apply to all your income. The amount of tax you pay on overtime depends on your total income for the year, not just the overtime itself.

How overtime is taxed

Added to your total income

Overtime is added to your regular salary to calculate your total taxable income for the tax year. Your employer deducts income tax and National Insurance from your overtime pay in the same way they deduct it from your regular salary.

Taxed at your marginal rate

Overtime is taxed at your marginal rate – the highest rate of tax you pay based on your total income. If you're a basic rate taxpayer, your overtime is taxed at 20%. But if your total income (including overtime) pushes you into a higher tax band, the portion of your overtime above the threshold is taxed at 40%.

No special overtime tax rate

There's no special higher tax rate for overtime. Overtime is treated the same as any other income – it's taxed based on your total earnings for the year. The reason overtime can feel heavily taxed is because it's added on top of your existing salary, so it may push you into a higher tax band.

National Insurance on overtime

Overtime is also subject to National Insurance contributions. NI is calculated separately from income tax using its own thresholds and rates. Like income tax, NI is calculated on your total earnings, including overtime.

What affects the tax on your overtime

• Your total income for the tax year (regular salary plus overtime)
• Which tax band your total income falls into
• Your tax code (which determines your tax-free allowance)
• Whether the overtime pushes you into a higher tax band

What you can do

If you want to see how overtime affects your take-home pay, use our calculators to estimate your pay with and without overtime. This helps you understand how much of your overtime pay you'll actually receive after tax and National Insurance.

Remember that working overtime increases your gross pay, which increases your take-home pay even after tax. While you'll pay tax on the overtime, you'll still receive more money than if you hadn't worked the overtime.

If you're concerned about how much tax you're paying on overtime, check your payslip to see the breakdown. The tax on overtime should be calculated based on your total income for the year, not at a special higher rate just because it's overtime.

Related guides

For more information about UK tax and how it's calculated, see our UK Tax Guide. If you're wondering why your take-home pay changes, read our guide on why take-home pay changes.