The gap nobody warns you about
You start a new job on 12 May. The company pays on the 25th. You assume you will be paid on 25 May, and you assume it will be a decent chunk. Then the 25th arrives, the payment is a fraction of what you expected, and payroll explains that you missed the cut-off so it will all come through in June.
That is six weeks between your last pay from the old job and your first proper pay from the new one, which is long enough to do real damage if nobody told you it was coming. It is entirely normal and entirely predictable, so here is what actually happens and how to plan for it.
Why the first payslip is small
Three things stack up, and any one of them on its own is manageable.
You are paid for part of a month. Starting on the 12th of a month, you have worked roughly two thirds of it, so you get roughly two thirds of a month's pay. Employers calculate this in different ways: some use working days in the month, some use calendar days, some use a fixed 1/260th of annual salary per working day. The methods produce slightly different answers and all of them are legitimate.
You may have missed the payroll cut-off. Payroll has to be submitted days before payday, so a start date close to the pay date often means your first payment is delayed to the following month. Some employers will run an off-cycle payment if you ask, particularly if the delay is long.
You may be on an emergency tax code. Which brings us to the expensive part.
Emergency tax codes: what they are and why they cost you
If your new employer does not have your previous income and tax details, HMRC applies an emergency code. You will see it on your payslip as something like 1257L W1, 1257L M1 or a code ending in X. Some payroll systems show it as NONCUM.
Under a normal cumulative code, your tax is worked out on your income for the year so far, so unused Personal Allowance from earlier months is taken into account. Under an emergency code, your tax is worked out on that week or month alone, as if you were paid that amount every period of the year. That is why it so often produces the wrong figure.
| Code | What it means |
|---|---|
| 1257L | The standard code: full £12,570 Personal Allowance, applied cumulatively |
| 1257L W1 / M1 / X | Emergency code: allowance given for that period only, nothing carried forward |
| 0T | No Personal Allowance at all. Usually applied when the employer has no details |
| BR | Everything taxed at basic rate, usually used for a second job |
0T is the one that hurts most. With no Personal Allowance, you pay 20% from the first pound, and at higher earnings you can pay 40% on part of a first payslip that would not have attracted higher rate tax at all under the correct code.
A worked example
You start on 12 May on a salary of £33,000, and your employer pays on the 25th using a 1/260th working-day calculation. You have 14 working days in the month from your start date.
On the correct cumulative code (1257L), you would have two months of Personal Allowance available, because May is month 2 of the tax year. Tax due would be very low, potentially nil, and you would take home close to the full amount after National Insurance.
On 0T, there is no allowance at all, so you pay 20% on the whole £1,776.92, which is £355.38. That is roughly £350 more tax than you should have paid, in the month you can least afford it.
How to Avoid It
Two documents do the job, and getting either to your new employer before the first payroll run is what prevents the whole problem.
Your P45. Your old employer gives you this when you leave. Parts 2 and 3 go to your new employer. It tells them your earnings and tax to date, which lets them use the correct cumulative code from your first payslip. Hand it over on day one, not when you get round to it.
The starter checklist. If you have no P45, because you have been out of work, are coming from abroad, or your old employer has been slow, fill in HMRC's starter checklist instead. Answering it accurately, particularly the question about whether this is your only job, is what determines the code you are given in the meantime.
Chase your P45 if it does not arrive. Your old employer has to provide one, and "we will post it eventually" is not good enough when it is costing you hundreds of pounds.
Getting overpaid tax back
You are not going to lose the money. The question is only when you get it.
In most cases HMRC updates your code once it has your details from the old and new employers, and the correction happens automatically through PAYE. When the correct cumulative code is applied, the next payslip refunds the overpayment, which is why a second payslip is sometimes larger than expected.
If it is not sorted out within the tax year, HMRC issues a P800 tax calculation. Those are sent between June and March of the following tax year, and if you are due a refund the letter explains how to claim it.
You do not have to wait passively. Sign in to your personal tax account and check what HMRC thinks your employment and income situation is. If it is wrong, correcting it there is usually what triggers a corrected code being issued to your employer.
Planning the Gap
Once you know a job offer is real, work out the actual gap before you resign, not after.
- Find your last pay date at the old job, and check whether you are owed accrued holiday, which will be paid in your final packet.
- Ask the new employer two questions: what date do you pay, and what is the payroll cut-off for a new starter. Ask before you accept if you can. It is a completely ordinary question.
- Count the days. If the gap is more than five weeks, say so and ask whether an off-cycle first payment is possible. Employers say yes more often than people expect, because they would rather not lose a new starter to a cash flow problem.
- Move your direct debits if a bill falls awkwardly in the gap. A one-off date change is free; a returned direct debit is not.
The payday countdown is useful here for the obvious reason: knowing the exact number of days you need to stretch is a lot better than a vague sense of "a few weeks".
One more thing to check
Look at the deductions on that first payslip beyond tax. Auto-enrolment into a workplace pension usually happens after a short period, and student loan deductions should start on the correct plan. Both are easy to get wrong on a new starter record, and both are easier to correct in month one than in month six.
For more on managing the gap between paydays, see the guide to UK pay cycles and the FAQ.