First UK Job: The Complete Earning Guide

Starting a first UK job introduces a new earner to several systems running in parallel: PAYE tax collection, National Insurance, auto-enrolment pension, statutory holiday, sick pay, and the framework of employment rights under the Employment Rights Act 1996. The transition from student or unemployed status to full-time earner shapes household finances and tax position.

This guide walks through the first-job essentials: registering for tax through the starter checklist or P45, the payslip components, the auto-enrolment pension setup, holiday and sick pay entitlements, and a first-month checklist for the new employee.

The starter process and tax code

On starting a new job the employee provides either a P45 from a previous UK employment (if applicable) or completes a Starter Checklist (replacing the older form P46). The starter checklist asks the employee's situation: is this your only job, do you have another, are you a student loan borrower, etc.

The employer uses the information to set the initial tax code. Common starter codes: 1257L cumulative (standard, only job, with P45), 1257L M1 (emergency, only job, no P45), BR (second job or no allowance), 0T (no PA, full rates).

The first payslip applies the chosen tax code. Where the code is emergency (M1 or W1), each pay period stands alone for calculation - producing over-tax in early months that is corrected once HMRC issues a cumulative code from the first RTI submission.

Worked example: a graduate starts their first job in September 2026 at GBP 28,000 salary. They complete the starter checklist ticking 'only job since 6 April'. The employer sets 1257L M1 (emergency). The first October payslip applies one-twelfth of the GBP 12,570 PA to October's pay of GBP 2,333. Tax around GBP 257. HMRC sees the RTI; issues cumulative 1257L code; November pay applies year-to-date allowance retroactively and produces a tax refund through PAYE.

Reading the first payslip

The payslip shows: gross pay (basic salary plus any overtime, bonus, or allowances), pre-tax adjustments (salary sacrifice into pension if elected), taxable pay, income tax deducted, employee NI deducted, pension contribution, net pay. Year-to-date totals appear on the right side.

For a first job starter on GBP 28,000 in September: gross monthly pay GBP 2,333, income tax around GBP 257 (after PA), employee NI 8% on the slice above the PT = around GBP 105, auto-enrolment pension contribution (if enrolled) 5% of qualifying earnings = around GBP 90, net pay around GBP 1,881.

Section 8 of the Employment Rights Act 1996 requires the payslip to show gross pay, the amount and reason for every deduction, the net pay, and the method of payment. Where any line is unclear, the payroll team should be able to explain the calculation.

Practical action: keeping the first payslip and a screenshot of the PTA showing the active tax code provides the baseline for any later queries. Where the figures look wrong (large unexplained deductions, wrong tax code), prompt query to payroll typically resolves quickly.

National Insurance and your earnings

Class 1 employee NI applies to earnings above the Primary Threshold (GBP 12,570 annual / GBP 1,048 monthly). The rate is 8% on earnings between PT and the Upper Earnings Limit (GBP 50,270 / GBP 4,189 monthly), then 2% above. The 2024 rate cut from 12% to 8% applies to all monthly pay runs from April 2024 onwards.

NI is non-cumulative: each pay period stands alone. A bonus month attracts 8% on the bonus amount where the year-to-date is still below UEL. Once UEL is crossed in the cumulative annual position, the 2% rate applies on the slice above.

NI builds State Pension entitlement. Earnings above the Lower Earnings Limit (GBP 6,500 annual / GBP 542 monthly) accrue a qualifying year for State Pension purposes, even where the actual NI charge is small or zero (between LEL and PT). 35 qualifying years are needed for the full new State Pension.

Worked example: a starter on GBP 28,000 salary pays NI at 8% on (28,000 - 12,570) = GBP 1,234/year. Monthly NI around GBP 103. Combined with income tax of around GBP 3,086, the total deductions are GBP 4,320/year. Take-home before pension contribution around GBP 23,680, or GBP 1,973 monthly.

Auto-enrolment pension

Auto-enrolment under the Pensions Act 2008 requires employers to enrol eligible jobholders into a qualifying pension scheme. Eligibility: age 22 or above, below State Pension Age, earning above the earnings trigger of GBP 10,000/year. Below age 22 or below the earnings trigger, the employee can opt in voluntarily.

Total minimum contribution 8% of qualifying earnings (3% employer + 5% employee inc tax relief). Qualifying earnings are the slice between LEL (GBP 6,240) and UEL (GBP 50,270). Some employers use different bases (basic pay, total pay) under certification rules. The contribution starts after a 'staging' or 'postponement' period of up to 3 months.

The pension provider sets up the account; the contractor receives joining information showing the pension fund choice and the contribution flow. Most employees stay in the default fund (typically a lifestyle or target date fund managed by the pension provider). Active fund choice is available through the provider's portal.

Opt-out: the employee can opt out within the first month of enrolment for a full refund of contributions. After the first month, opt-out is possible but the contributions made stay in the pension. The pension is portable - transfers to future employers or personal SIPPs preserve the value.

Holiday, sick pay, and other entitlements

Statutory holiday entitlement under the Working Time Regulations 1998 is 5.6 weeks per year (28 days for a 5-day week, pro-rata for part-time). Bank holidays may be included in the 28 days or separately granted at employer discretion. The first year's allocation is typically accrued pro-rata based on start date.

Statutory Sick Pay at GBP 116.75/week (2024/25; check current) applies after 4 consecutive days of sickness (the 'qualifying days') up to 28 weeks. Many employers operate enhanced sick pay (full salary for some weeks, half pay for further weeks) above the SSP minimum.

Statutory minimum notice: 1 week's notice during the first month of employment, increasing with continuous service to a minimum of 1 week per year of service (capped at 12 weeks). Employers typically specify longer notice in the contract.

Other entitlements through statute: parental rights (maternity, paternity, adoption, shared parental leave), unpaid carer's leave (1 week per year from April 2024), bereavement leave, time off for dependants, family-friendly flexible working request rights.

The first month checklist

Bank account: salary must be paid into a UK bank account. Most employees use their existing personal current account; a new bank account can be opened in advance if needed. The HR team requests the sort code and account number; the first salary payment lands by the employer's standard pay date (typically end of month or specific day each month).

Tax code verification: check the tax code on the first payslip against the expected code. Standard 1257L for a first job in the tax year, S1257L for Scottish residents, C1257L for Welsh. Emergency codes (M1, W1, BR, 0T) need attention as they may over-tax in early months.

Pension auto-enrolment: confirm the enrolment letter received, decide whether to opt out or remain. Most starters benefit from remaining in - the employer's contribution is 'free money', and the long compounding horizon makes pension saving attractive even at modest contributions.

Personal Tax Account: register at gov.uk/personal-tax-account to access tax code, NI record, and other HMRC information. Useful for queries and for the eventual State Pension forecast checks.

Salary banking, bills setup, and budget basics

First salary lands on the employer's standard pay date (often the 28th, or the last working day, or the 15th depending on employer). Setting up direct debits to align with the pay date avoids cash flow gaps. Most banking apps allow scheduling direct debits to leave a few days after the expected pay date.

Essential bills to set up: rent or mortgage (typically already in place), council tax, utilities (gas, electricity, water), broadband, mobile phone, transport (Oyster, season ticket, fuel card), groceries. Setting these as direct debits at consistent dates produces predictable monthly outgoings.

Budget structure: target keeping fixed monthly costs (rent, bills, transport, subscriptions) at 50-60% of take-home, variable spending (groceries, eating out, entertainment) at 20-30%, and savings/investments at 10-20%. The 50/30/20 framework is a common starting point that adjusts with circumstances.

Practical action: opening a separate savings account at a different bank reduces temptation to spend the savings on impulse. Automatic transfer to savings on payday before spending starts is the standard pattern for consistent saving discipline.

Student loan deductions and your first job

Graduates with student loans repay through PAYE on income above the relevant plan threshold. Plan 1 (pre-2012 starters): 9% above GBP 26,065/year. Plan 2 (post-2012 England/Wales): 9% above GBP 28,470. Plan 4 (Scotland): 9% above GBP 32,745. Plan 5 (post-Aug 2023 England starters): 9% above GBP 25,000. Postgraduate loans: 6% above GBP 21,000.

Deductions are non-cumulative - each pay period calculates 9% of the slice above the proportional monthly threshold. A bonus month produces higher deductions in that month with no later reconciliation. The Student Loans Company collects through HMRC and applies to the loan balance.

On starting the first job, declare the correct plan on the starter checklist. HMRC and the employer use this to apply deductions. Where the plan is misdeclared (e.g. Plan 1 declared instead of Plan 2), deductions calculate against the wrong threshold; HMRC corrects on RTI processing.

Worked example: a Plan 2 graduate on GBP 32,000/year. Monthly pay GBP 2,667. Monthly Plan 2 threshold GBP 2,372.50. Monthly deduction 9% of (2,667 - 2,372.50) = GBP 26.50. Annual student loan repayment around GBP 318. The repayment doesn't reduce the loan principal materially; most Plan 2 borrowers will see the loan written off after 30 years before clearing it through payroll alone.

Common first-month issues and resolutions

Emergency tax code over-deducting: the most common first-month issue. The employee on 1257L M1 has tax applied as if the year had just started, not cumulatively. Resolution: wait 1-2 pay cycles for HMRC to issue the cumulative code; the next pay run applies year-to-date allowance retroactively and produces a tax refund line.

Wrong pension scheme enrolment: occasionally the employer enrols the new starter in a wrong scheme or applies the wrong contribution rate. Resolution: check the enrolment letter, confirm the scheme name and contribution rate, query through HR if inconsistent with the employer's published policy.

Missing or wrong P45 from prior employer: causes emergency tax code on starter checklist. Resolution: chase the previous employer for the P45; alternatively, complete the starter checklist accurately and accept the emergency code for 1-2 months until HMRC resolves.

Practical action: keeping the offer letter, starter checklist response, first 2-3 payslips, and any HMRC correspondence in one folder provides the documentation for any issue that arises. The Personal Tax Account shows the current tax code and any coding notices; checking it weekly during the first month surfaces issues early.

Frequently asked questions

What tax do I pay on my first job?

PAYE income tax on earnings above the Personal Allowance of GBP 12,570/year. Class 1 employee NI at 8% on earnings between GBP 12,570 and GBP 50,270. A new starter on GBP 25,000 pays around GBP 2,486/year income tax + GBP 994/year NI = GBP 3,480 total. After deductions take-home around GBP 21,520/year or GBP 1,793/month.

Do I have to join a pension?

Auto-enrolment applies if you're aged 22 or above and earning above GBP 10,000/year. The employer enrols you automatically; you can opt out within the first month for a full refund of contributions. Most starters benefit from staying enrolled - the employer's contribution (3% of qualifying earnings) is 'free money' that adds to your retirement savings.

How much holiday will I get?

Statutory minimum 5.6 weeks per year (28 days for a 5-day week, pro-rata for part-time). Bank holidays may be included in the 28 days or separately at employer discretion. The first year's allocation accrues pro-rata based on start date. Many employers offer enhanced holiday above the statutory minimum (e.g. 25 days + bank holidays = around 33 days).

What's a P45?

A document issued by an employer when you leave a job. Shows year-to-date earnings, tax paid, NI category, and tax code. Used by the new employer to continue the cumulative PAYE calculation. If you don't have a P45 (first job, returning from abroad, lost the document), the starter checklist substitutes - you complete a form indicating your situation and the employer applies an emergency tax code until HMRC issues a corrected cumulative code.

Why is my first payslip lower than expected?

Usually because of emergency tax code applying the Personal Allowance only to that month's pay (rather than year-to-date). The over-tax corrects in the following month once HMRC issues a cumulative code. Alternatively, you may not have received the full month's pay if you started mid-month, or you may have started pension auto-enrolment which deducts contributions. Checking the year-to-date totals on the second payslip usually shows the position normalising.

Do I have to register with HMRC for a new job?

No. The employer handles tax registration through the starter checklist or P45. HMRC creates or updates your tax record automatically from the employer's RTI submissions. You only need to register for Self-Assessment if you have other untaxed income (self-employment, rental, dividends above GBP 10,000) or other specific triggers.