First pay · 5 min read
Why is my first payslip so low? Emergency tax explained
Why your first payslip is lower than expected: emergency tax codes 1257L W1, M1 and BR, the starter checklist, how to read a payslip, and how refunds come back.
The short answer
A first payslip is usually low for one of three reasons: an emergency tax code because your employer didn't have your details in time, National Insurance and a student loan deduction you hadn't budgeted for, or a part-month of pay. Emergency codes such as 1257L W1 or M1 ignore the tax-free allowance you've built up since April, and a BR code taxes everything at 20%. Fill in HMRC's starter checklist or hand over your P45, the code corrects within a payslip or two, and any overpayment comes back in your pay automatically.
Key takeaways
- 1257L is the normal code for 2026/27: you pay no tax on the first £12,570 a year. W1, M1 or X after it means emergency: each payslip is taxed in isolation.
- BR means every pound taxed at 20% with no allowance, usually because HMRC thinks this is a second job. 0T is similar.
- National Insurance is 8% of earnings between £242 and £967 a week, and it starts from your first pay regardless of code.
- Overpaid tax under PAYE comes back through your pay once the code is fixed. You don't need to claim unless the tax year has ended.
On this pageReading the payslip
Reading the payslip
| Line | What it is | What to check |
|---|---|---|
| Gross pay | What you earned before deductions | Matches your contract divided by 12, or hours times rate |
| Tax code | Tells payroll how much allowance to give you | 1257L with no W1, M1, X or BR |
| PAYE tax | Income tax deducted | Roughly 20% of gross minus £1,047 a month |
| National Insurance | 8% between £1,048 and £4,189 a month | Starts from day one; not affected by tax code |
| Student loan | 9% above your plan threshold, 6% for postgraduate | Correct plan type; nothing if below threshold |
| Pension | Your contribution, usually 5% of qualifying earnings | Employer adds at least 3% |
| Net pay | What reaches your account | The number to budget on |
The emergency codes and what each does
1257L W1 or M1 (W for weekly, M for monthly pay) gives you one week's or one month's worth of allowance per payslip and ignores earlier months. If you start in October having not worked since April, a cumulative 1257L would give you six months of unused allowance at once and you might pay no tax until January; the M1 code doesn't, so you overpay until it's fixed. BR taxes everything at 20% because HMRC assumes another job is using your allowance. 0T gives no allowance and applies all bands. Each is a placeholder, not a mistake you made.
Fixing it in three steps
- Hand in your P45 if you have one from a job this tax year. If not, complete the starter checklist, choosing the statement that's true of you.
- Check your HMRC personal tax account a week later. If the code still looks wrong, update your employment details there or phone HMRC.
- Compare your next payslip. A corrected cumulative code refunds the overpayment as part of that pay.
What a first payslip looks like at £27,000
On a correct 1257L code, a £27,000 salary pays £2,250 a month gross. Tax is about £240, National Insurance about £96, a Plan 5 student loan £15, and a 5% pension contribution £113 before tax relief. Net pay lands around £1,785. On a BR emergency code the tax line would read £450 instead, and the payslip would be about £210 lighter until the code is fixed.
Illustrative example: the October starter
A graduate starts her first job in October with no P45 and forgets the starter checklist. Her first payslip carries 1257L M1 and she pays £240 tax on a month she expected to be tax-free, because six months of allowance went unused. She completes the checklist in week two. November's payslip switches to cumulative 1257L and shows a tax line of nil and a refund of the £240. Nothing was lost except a month of worrying.
Questions people ask
- How do I stop being emergency taxed?
- Give your employer your P45 from your last job, or if you don't have one, complete the starter checklist they should have given you. Pick statement A if this is your only job and your first since 6 April, B if you've had another job this tax year, C if you have another job now. Your code is updated at the next payroll run.
- How long does an emergency tax refund take?
- If the tax year is still running, there's no separate refund: your next payslip with the correct code includes the overpayment as a lower deduction or a credit. If the tax year has ended, HMRC sends a P800 calculation, usually between June and November, and you claim the refund online. You can also check your tax code at any time in your HMRC personal tax account.
- Why am I paying tax when I earn under £12,570?
- Because an emergency or BR code doesn't know your annual income. Under a W1 or M1 code each payslip gets a twelfth of the allowance, so a one-off larger payment is taxed. Under BR there's no allowance at all. Once the code is 1257L on a cumulative basis the system looks at the whole year and gives the tax back.
- What's the difference between tax and National Insurance?
- Income tax is 20% on earnings between £12,570 and £50,270 a year, 40% above that. National Insurance is a separate 8% on earnings between £12,570 and £50,270, 2% above, and it's worked out per pay period, so it isn't affected by your tax code. Both come off before you're paid.
Exercises are practice, not evidence of career fit or a qualification. How to read our guides and report a correction.
Sources
- Emergency tax codes · HM Revenue and Customs, GOV.UK
- Starter checklist for PAYE · HM Revenue and Customs, GOV.UK
- Repaying your student loan: what you pay · GOV.UK
How this page is written
Sources support the factual background, not a guarantee that an exercise predicts career fit. Fictional practice material is labelled. Dates record content updates; no independent expert review is implied. More about OffLadder.