Your first payslip explained: tax, National Insurance and student loan, line by line
By Marcus Reid · Updated 8 July 2026
You get your first proper job, agree a salary or an hourly rate, do the maths in your head, and then the first payslip lands and the number at the bottom is smaller than you expected. That gap between what you were promised and what actually reaches your account is not a mistake, most of the time. It is the deductions doing their job. Nothing is broken. This walks through every line on a first payslip, what each one is, and why the very first one can look worse than it should before it settles down.
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Gross pay, deductions, take-home
Every payslip has the same basic shape. At the top is your gross pay, which is what you earned before anything comes off. Then a set of deductions. At the bottom is your net or take-home pay, which is what actually gets paid to you. The three deductions that catch first-timers out are income tax, National Insurance and, for graduates, a student loan repayment. A workplace pension often sits there too if you have been auto-enrolled. None of these are optional extras your employer added: they are collected through PAYE, the system that takes tax straight out of your pay before you ever see it.
Income tax: the Personal Allowance is the line that matters
For the 2026/27 tax year the Personal Allowance is £12,570, which is the slice of income you pay no income tax on at all across the year. If you earn under that in total over the tax year, you owe no income tax, full stop. Above it, the first band of taxable income is taxed at 20%, and that band runs up to £50,270, which is well beyond what most first jobs pay. So for a typical starting salary the only income tax rate that touches you is the basic rate, and only on the part of your pay above the allowance. One rate. One threshold.
The catch for summer and part-year workers is that the allowance is spread evenly across the year by your tax code, not handed to you in one lump. So a single busy month can look overtaxed even when your total for the year will end up under the threshold. That evens out, and where it does not, you can get it back. More on that below.
National Insurance: a separate threshold, and it does not carry over
National Insurance is a second, separate deduction with its own threshold, and it does not work like income tax. You start paying it once you earn more than £242 a week, which works out at £1,048 a month. On earnings between that threshold and £967 a week the employee rate is 8%, and anything above £967 a week is charged at just 2%.
The important difference from income tax is that National Insurance is worked out on each pay period on its own. There is no annual allowance that carries across the year, so a one-off big month can trigger an NI deduction even if your yearly total is modest, and unlike overpaid income tax it is not usually refunded afterwards. It is not a mistake on the payslip: it is just how NI is designed.
The student loan line, and why it might not be there yet
This is the one graduates worry about and students misunderstand. Student loan repayments do not start until the April after you leave your course. So if you are still studying and working a summer job, there should be no student loan line on your payslip at all, no matter how much you earn that month. If you see one while still enrolled, query it.
Once repayments do start, the exact point they kick in depends on your plan. Plan 2, which covers most English and Welsh students who started from 2012 to 2022, means you repay 9% of everything you earn above £29,385 a year. Plan 5, for students who started from 2023 onwards, means you repay 9% above £25,000, and postgraduate loans are 6% above £21,000. Plan 1, for older loans, uses a £26,900 threshold and Plan 4, for Scottish students, £33,795, both also at 9%.
Two things to hold onto. It comes off only the part of your pay above your threshold, not your whole salary. And like NI, it is worked out per pay period, so a bonus month can produce a deduction even if your annual income sits under the line. Our full guide to how student loan repayment works walks through the plans in detail.
Why your first payslip can look wrong: emergency tax codes
The single most common reason a first payslip looks brutal is an emergency tax code. If your employer does not have a P45 from a previous job when you start, they often cannot spread your allowance properly yet, so you get taxed on a temporary basis. That usually shows as a code like 1257L followed by W1 or M1 on the payslip. It taxes you as if the amount you earned this period is what you will earn every single period of the year, which for a first or irregular month overstates your income and takes too much.
When I read through the government emergency tax code guidance for this piece, the part that stuck with me is that the standard 1257L code simply spreads the £12,570 allowance evenly across the year, so one unusually big month gets taxed as if every month looks like that. Do not panic. The fix is boring and it works: give your employer your P45, or if you do not have one, make sure your details are submitted so HMRC can issue a normal cumulative code. Once the right code is in place, any tax you overpaid earlier in the year is repaid automatically through your later payslips, and if it does not resolve, HMRC refunds it after the tax year ends or you can claim it back sooner.
What to actually check on your first payslip
Read it once, properly, and you will rarely need to again. Check the tax code is a normal cumulative one and not stuck on a W1 or M1 emergency basis. Check there is no student loan deduction if you are still studying. Check your gross pay matches the hours or salary you agreed. Check you have not been auto-enrolled into a pension you did not expect, though staying in is usually the right call because your employer pays in too. And if your pay lands in a bank account you opened as a student, it is worth a look at whether it is still the right account now that money is coming in rather than just going out. Our roundup of the best student and graduate bank accounts covers the switch.
The honest headline is this: a smaller-than-expected first payslip is almost always the system working, not failing. The one case worth acting on fast is the emergency tax code, because that is real money you can get back. Chase that. Everything else is just the gap between gross and take-home that every worker in the country lives with.
Frequently asked questions
Why is my first payslip taxed so much?
Usually because you are on an emergency tax code. Without a P45 from a previous job, your employer taxes you on a temporary basis that assumes this period's pay repeats all year, which overstates your income. Once a normal cumulative code is applied, the overpayment is corrected through later payslips.
Do I pay student loan on a summer job?
No. Repayments only start the April after you leave your course, so while you are still enrolled there should be no student loan deduction on your payslip, whatever you earn. If you see one, query it with your employer.
When do National Insurance deductions start?
You start paying National Insurance once you earn more than £242 a week, which is £1,048 a month. Unlike income tax, it is worked out on each pay period separately and is not refunded if a single big month pushes you over.
What does the 1257L tax code mean?
It is the standard tax code for the 2026/27 year and reflects the £12,570 Personal Allowance. On its own it is fine. It only causes overtaxing when it is applied on an emergency W1 or M1 basis, shown as 1257L W1 or 1257L M1.
How do I get overpaid emergency tax back?
Give your employer your P45 or make sure your details are submitted so a normal code is issued. Overpaid tax is then usually repaid automatically through your later payslips in the same year. If it is not, HMRC refunds it after the tax year ends, or you can claim it back sooner.
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