The UK’s PAYE system runs on a personal tax code that tells your employer how much income tax to deduct from each pay packet. When you change jobs, that code is meant to flow seamlessly via your P45 — but in practice, the most common new-starter mistakes are around the P45, the Starter Checklist (which replaces the old P46), and the emergency tax code 1257L W1/M1 that HMRC defaults to when the paperwork goes missing. Get the first month right and your tax sorts itself out for the rest of the year. Get it wrong and you’ll spend months either over-withholding (refund at year-end) or under-withholding (bill at year-end).
This guide walks through the P45 vs Starter Checklist decision, the emergency code triggers, student loan continuity, NI Class 1 mechanics, and the workplace pension auto-enrolment carry-over.
P45 — The Form Your Old Employer Owes You
When you leave a UK PAYE job, your old employer must give you a P45 within a reasonable time (usually with your final payslip). It’s a 4-part form showing:
- Your tax code as of leaving
- Your pay and tax from 6 April to leaving date
- Your National Insurance number and HMRC reference
- Whether you have a student loan and which plan
- Confirmation of any P11D benefits
Hand Parts 2 and 3 to your new employer on day one. They send Part 3 to HMRC and use Part 2 to set up your withholding immediately at your correct cumulative tax code — meaning any overpaid or underpaid tax from earlier in the year is automatically reconciled in your first paycheque rather than left until year-end.
If your old employer hasn’t sent the P45 by the time you start, chase them. Legally they must issue it; in practice payroll departments lag 1-4 weeks. If they’re slow, the new employer falls back to the Starter Checklist.
Starter Checklist — When You Don’t Have a P45
If you don’t have a P45 by the time you start (recent graduate, returning from time abroad, P45 lost, old employer slow), you fill in the HMRC Starter Checklist (also called PAYE Starter Checklist; the old “P46” is no longer issued by HMRC but the form persists at some employers). Your new employer uses your tick-box answers to set a tax code.
The single most consequential question on the Starter Checklist is Statement A / B / C:
| Statement | When to tick | Resulting code |
|---|---|---|
| A — This is my first job since 6 April and I have no other taxable income | Recent graduate, returning from full-time study, returning from time outside UK | 1257L cumulative — uses full personal allowance from start |
| B — Since 6 April I’ve had another job but I’ve now stopped that, and have no other taxable income | Most common: changed jobs mid-year, no concurrent jobs | 1257L W1/M1 (emergency) — uses pro-rated personal allowance |
| C — I have another job or pension | Two concurrent jobs, or starting alongside a pension | BR (basic rate) — second income taxed at 20% with no personal allowance |
The emergency code trap. Statement B triggers code 1257L W1/M1 — non-cumulative. HMRC and your new employer assume your year-to-date pay/tax is unknown, so each pay period is treated as 1/52 of a fresh year. This usually over-withholds by a few hundred pounds across the first few months because it doesn’t account for unused personal allowance from any gap in employment.
Once HMRC receives your P45 from the old employer (within 4-6 weeks via RTI), they update your code to a cumulative one and the next paycheque adjusts. If the gap was significant (you were unemployed for 3 months between jobs), the catch-up adjustment can be a substantial refund baked into one paycheque.
Statement A is the cleanest start — code applied cumulatively from the start with the full annual personal allowance available. Only available if this is genuinely your first PAYE job since 6 April; ticking A when B is correct produces under-withholding and a year-end bill.
Statement C is for concurrent two-job situations. If you’re keeping the existing job and starting another, Statement C on the new one means the new employer applies code BR (basic rate, 20% on every pound, no personal allowance) — because your existing employer is using the personal allowance.
Use the tax code checker to confirm the code on your first payslip matches what you expected.
Emergency Tax Code 1257L W1/M1 — How to Spot and Fix
If your first payslip from the new employer shows code 1257L W1/M1 or 1257L X, you’re on emergency code. This is normal in the first 4-6 weeks.
It self-corrects when HMRC processes your P45 (or, if no P45, when the old employer’s RTI submission lands). Most cases resolve automatically by your second or third paycheque.
It doesn’t self-correct in some scenarios:
- Your old employer never submitted the P45 to HMRC (rare but happens with small employers)
- You have multiple PAYE income streams and HMRC needs to reallocate the personal allowance
- You started a new pension drawdown alongside employment income
If still on emergency code by your third paycheque, contact HMRC via your Personal Tax Account (gov.uk/personal-tax-account) and request a code review. Usually fixed within 5-10 working days.
Student Loan — The Plan Number on Your P45
Your student loan plan flows from the P45. Confirm the plan number is correct on your first payslip:
| Plan | When loan was taken | Threshold (2025-26) | Rate |
|---|---|---|---|
| Plan 1 | Pre-September 2012 (England + Wales) | £24,990 | 9% above |
| Plan 2 | September 2012 onward (England + Wales) | £27,295 | 9% above |
| Plan 4 | Scotland | £31,395 | 9% above |
| Plan 5 | September 2023 onward | £25,000 | 9% above |
| PGL | Postgraduate Loan | £21,000 | 6% above |
If your P45 shows the wrong plan or no plan, your new employer’s payroll won’t deduct the right amount and you’ll owe back-payment. Check your old payslips to confirm the plan and ask payroll to update if needed.
If you have both an undergraduate plan and a postgraduate loan, both deductions stack — see the student loan calculator for combined-deduction examples.
National Insurance — Class 1 Continuity
National Insurance Class 1 (employees) is calculated per pay period with each employer separately. There’s no “carry-over” of the annual NI contribution allowance the way income tax has cumulative coding — each employer treats your NI contributions independently.
Practical implications:
- You won’t double-pay NI in the gap between jobs — NI accrues only when you’re in employment
- You can over-pay NI if you had two concurrent jobs at any point — the second employer assumes you weren’t paying max NI elsewhere. Refunds happen at year-end via HMRC reconciliation, but you can also apply for a deferment certificate to avoid the over-withhold up front
- Class 1 NI is separate from any private pension auto-enrolment — both come out of your gross pay but they’re independent calculations
The 2025-26 employee NI rates: 8% on earnings between £12,570 and £50,270 per year (the primary threshold and upper earnings limit), then 2% above £50,270. Confirm the rate-bracket transitions show correctly on your payslip with the National Insurance calculator.
Workplace Pension — Auto-Enrolment Carry-Over
Auto-enrolment does not carry over between employers. Each new employer must auto-enrol you into their workplace pension scheme within 3 months of your start date if you’re age 22+ and earn over £10,000/year. You then have 30 days to opt out (cleanly, with refund of any contributions made) — after that opting out is still possible but contributions already made can’t be refunded.
Decision points:
- Stay in (default) — captures the employer match (typically 3% employer + 5% employee total = 8% gross contribution) and tax relief. Free money for most starters.
- Opt out within 30 days — only if you have higher-priority financial goals or genuinely can’t afford the pay reduction. Most people benefit from staying in.
- Increase contribution rate above the minimum — many employers match higher contributions up to a cap (e.g., “we match 1-for-1 up to 6%”). Always worth checking the employer match ceiling.
If you have an old workplace pension from your previous employer:
- Leave it where it is — the funds continue to grow per the plan’s investment strategy
- Transfer it to your new employer’s scheme — the new scheme’s provider can usually facilitate this
- Transfer it to a personal SIPP — wider investment choice, sometimes lower fees; use a regulated pension transfer broker
For pots over £30,000 from a defined-benefit (final salary) scheme, you must take regulated advice before transferring out — there’s a statutory right and an ongoing FCA requirement.
Your First Payslip — The Sanity Check
Within 1-2 weeks, you’ll get your first payslip. Spend 5 minutes verifying:
| Item | What to check |
|---|---|
| Gross pay | Matches the offer letter / contract |
| Tax code | 1257L cumulative if straightforward (1257L W1/M1 if on emergency, see above) |
| Income tax | Roughly matches the take-home pay calculator at your salary level + tax code |
| NI Class 1 | 8% on earnings above £12,570/year primary threshold (pro-rated to pay period) |
| Student loan | Plan-specific deduction if applicable |
| Pension contribution | At your elected rate (usually 5%); employer contribution shown separately |
| Net pay | Gross − Tax − NI − Student Loan − Pension = take-home |
If income tax is significantly off your projection, the most likely cause is a wrong tax code. If still on 1257L W1/M1 after the third paycheque, contact HMRC via your Personal Tax Account.
Multiple Concurrent Jobs — Special Considerations
If you’re keeping a second job (consulting, evening teaching, weekend retail), the second employer should apply code BR — basic rate 20% on every pound with no personal allowance (since the first employer is using the £12,570 PA). This usually under-withholds slightly because:
- The basic rate band runs to £37,700 above the PA, but secondary income may push your combined income into the higher rate band (over £50,270)
- Student loan is calculated on combined income, not per-employer
To fix the under-withholding without waiting for year-end self-assessment, ask HMRC to issue a K code or split your personal allowance between the two employers. Form HMRC P50T or your Personal Tax Account handles this.
If your combined income is under the basic rate band ceiling and you have no student loan, the two-employer setup with BR on the second usually works fine.
Frequently Asked Questions
Q: My P45 is wrong — wrong tax code or missing student loan info. What do I do?
Contact your old employer’s payroll first; they’re the only ones who can correct an issued P45. If they’re unresponsive, write to HMRC with the details of the discrepancy — HMRC can update your tax record and issue an adjusted code to the new employer.
Q: How long does it take for HMRC to update my tax code after a new job?
Usually 4-6 weeks from the new employer’s first RTI submission. The first paycheque almost always uses emergency code; the second or third typically reflects the cumulative code.
Q: I’m starting a contract role, not employment — does this guide apply?
Mostly no. Self-employed contractors don’t fill in a Starter Checklist; they invoice and file Self Assessment. See the self-employment Class 2 and 4 guide for NI obligations and the Payments on Account explainer for the quarterly tax cycle.
Q: Does my old employer’s pension auto-enrol over to the new one?
No. The new employer auto-enrols you into their own workplace pension scheme. You can leave the old pot where it is, or transfer it to the new scheme or a personal SIPP. There’s no automatic transfer between schemes.
Q: What happens if I don’t return the Starter Checklist?
The new employer must apply code 0T cumulative (no personal allowance, withholding at marginal rates from £0). This produces severe over-withholding — typically £100-£300 extra in the first month alone. Always return the Starter Checklist before the first pay run.
Q: I’m taking a sabbatical / career break — do I need to do anything for tax?
If you’re not in employment for the whole tax year, your personal allowance accumulates unused. When you return to employment, the cumulative tax code lets you claim the unused PA in your first month back (often a substantial refund). If you have any taxable income during the sabbatical (rental, dividends, freelance), file Self Assessment to reconcile.
Q: I work full time and just received a one-off freelance payment — how does this affect my tax?
Doesn’t affect PAYE withholding (your employer doesn’t know about the freelance income). You declare the freelance income on Self Assessment by the following 31 January. If the gross freelance income exceeds £1,000/year you must file SA; under £1,000 the trading allowance covers it. See Payments on Account explained for the SA mechanics.
Sources
- HMRC — PAYE forms: P45, P46, Starter Checklist
- HMRC — Tax codes — what they mean
- HMRC — Repaying your student loan
- HMRC — National Insurance contributions (employees)
- HMRC — Workplace pensions: auto-enrolment
Set up your first month right
Project your new salary’s take-home pay with the take-home pay calculator before accepting the offer. Verify the tax code on your first payslip is correct via the tax code checker — emergency code in month one is normal but should resolve by month three. If you have a student loan, confirm the right plan + threshold deduction with the student loan calculator. And if you’ve got an old workplace pension to consolidate, take the time to compare fees before transferring — it’s the single highest-leverage retirement decision a job-changer makes.