Overtime Tax UK: Is Overtime Taxed More? 2026

Overtime tax is one of the most misunderstood aspects of payroll management in the UK. Employees frequently believe overtime is “taxed more”, while employers and HR teams face recurring queries about fluctuating deductions, tax codes and National Insurance. In reality, overtime is not subject to a special tax rate. It is treated as ordinary earnings under UK tax law. The complexity arises from how PAYE and National Insurance operate when income varies from one pay period to the next.

For employers, overtime tax is not simply a payroll calculation issue. It engages compliance duties under PAYE regulations, National Insurance legislation, Real Time Information (RTI) reporting requirements and national minimum wage rules. Errors can expose the business to HMRC intervention, penalties or employee disputes, including potential unlawful deduction of wages claims where net pay issues are mishandled.

What this article is about: This article provides a comprehensive, compliance-focused explanation of overtime tax in the UK. It explains how overtime is treated under PAYE, whether overtime is taxed at a higher rate, how it affects tax bands and personal allowance thresholds, and how National Insurance applies. It also addresses tax codes, emergency tax, student loan deductions, national minimum wage implications and holiday pay considerations. The guide is written for employers, HR professionals and payroll managers who need to ensure lawful and accurate processing of variable earnings under UK employment law.

Section A: What Is Overtime Tax in the UK?

Overtime tax is not a separate category within UK law. There is no distinct “overtime tax rate”. Instead, overtime payments are treated as employment income and processed through PAYE in exactly the same way as standard wages. Understanding this principle is essential before examining how higher earnings affect deductions.

1. Is overtime taxed differently?

Under the Income Tax (Earnings and Pensions) Act 2003, earnings from employment include salary, wages and any profit derived from employment. Overtime falls squarely within this definition. Whether paid at the basic hourly rate, time-and-a-half, double time or another enhanced rate, it is taxable income.

There is no statutory provision creating a higher or separate rate of tax for overtime. If an employee appears to pay more tax when working additional hours, this is because their total earnings for the pay period have increased, not because overtime attracts a special rate.

For most employees, PAYE operates on a cumulative basis. This means each payment is assessed against income received since the start of the tax year. When overtime increases earnings in a particular period, payroll software recalculates the tax due based on total taxable income to date, using the employee’s HMRC-issued tax code. You can also expect payslips to show cumulative indicators such as YTD figures, which often helps explain why deductions shift in overtime-heavy periods.

From a compliance perspective, where the individual is an employee for tax purposes, overtime must be processed through PAYE in line with PAYE rules. Employers should not attempt to treat overtime as outside payroll where employment status and PAYE duties apply.

2. What counts as taxable overtime pay?

From a payroll perspective, overtime includes any payment for hours worked beyond an employee’s contractual hours. This typically covers:

• Overtime paid at the normal hourly rate
• Enhanced overtime premiums
• Guaranteed overtime required under the contract
• Non-guaranteed overtime offered at the employer’s request
• Voluntary overtime accepted by the employee

All of these payments must be processed through payroll and included in Real Time Information submissions to HMRC. Employers cannot lawfully pay overtime outside PAYE where the worker is an employee for tax purposes. For tax purposes, HMRC does not distinguish between regular and occasional overtime. Frequency has no bearing on tax treatment.

For broader context on how overtime arrangements operate in practice, see overtime and overtime pay.

3. Why overtime appears to be “taxed more”

The misconception that overtime is taxed at a higher rate usually arises for two reasons.

First, additional earnings may push part of an employee’s pay into a higher tax band during that pay period. For example, if overtime causes earnings to exceed the higher-rate threshold, the portion above that threshold will be taxed at the higher rate. The employee may interpret this as “overtime being taxed at the higher rate”, when in reality the higher rate applies to income above the threshold.

Second, National Insurance contributions are calculated on a non-cumulative basis. When earnings increase in a single pay period due to overtime, NIC deductions rise immediately. This can create the impression of disproportionate deductions.

In both cases, the underlying tax rates remain unchanged. It is the increase in total earnings that alters the calculation.

Section A Summary Overtime is not taxed differently under UK law. It is treated as ordinary employment income and processed through PAYE. There is no special overtime tax rate. Higher deductions during overtime-heavy periods result from increased total earnings crossing tax or National Insurance thresholds, not from any separate taxation rule.

Section B: How Overtime Affects Tax Bands and Personal Allowance

Although overtime is not taxed at a separate rate, it can materially affect how much tax is deducted in a particular pay period. This is because UK income tax operates through progressive bands and interacts with the personal allowance. When earnings increase, the distribution of income across those bands changes. Employers and payroll teams must understand this interaction to explain fluctuating deductions and apply PAYE correctly.

1. Does overtime push an employee into a higher tax band?

Income tax in the UK is charged at progressive rates. Earnings within each band are taxed at the rate applicable to that band. When overtime increases an employee’s total taxable pay for a period, more of that income may fall within a higher rate band.

For example, if an employee’s standard earnings place them close to the higher-rate threshold, overtime may cause part of their income for that pay period to be taxed at the higher rate. The higher rate applies only to the portion above the threshold. The remainder remains taxed at the basic rate.

For employees on a cumulative tax code, payroll software recalculates tax based on total earnings received since the start of the tax year. Where earnings fluctuate, this cumulative mechanism can create noticeable changes in net pay. For those on a non-cumulative Week 1/Month 1 code, each pay period is assessed independently, which can also result in variation when overtime is significant.

Overtime does not alter the tax rate itself. It changes where the employee’s earnings fall within the statutory tax bands. This is the same dynamic employees may recognise when they receive other variable pay, such as a bonus or commission, and query why deductions rise in that pay period (see tax on bonus and tax on commission).

2. Personal allowance taper and higher earners

Overtime may also affect employees whose total annual income approaches or exceeds the personal allowance taper threshold.

Under current rules, the personal allowance reduces by £1 for every £2 of adjusted net income above £100,000. Once income reaches £125,140, the personal allowance is fully withdrawn. This creates an effective marginal rate higher than the higher-rate band within the taper range, due to the combined impact of higher-rate tax and allowance reduction.

For senior employees or those receiving significant bonuses and overtime, variable earnings may trigger:

• Reduction in personal allowance
• HMRC adjustments to tax codes
• In-year changes to deductions

HMRC may revise the employee’s tax code to reflect projected annual income where overtime becomes regular or substantial. Employers must implement such coding notices promptly through payroll. Tax bands and taper thresholds are set annually and may change in future Finance Acts, so employers should ensure payroll settings and internal guidance remain current.

While most employees will not reach these thresholds, HR teams should understand the mechanism, particularly in sectors where overtime is common at higher salary levels.

3. Adjusted net income and related tax consequences

Increased earnings due to overtime may also affect other income-related tax mechanisms beyond the core tax bands.

For example, higher adjusted net income can influence liabilities and entitlements that HMRC reconciles through end-of-year processes or coding adjustments. Although payroll does not calculate an employee’s personal tax position beyond operating PAYE, overtime-driven changes can still result in HMRC correspondence, amended codes and employee queries.

Employers are not responsible for calculating individual liability under these regimes. However, understanding how higher gross pay affects broader tax exposure enables HR and payroll teams to respond accurately to employee questions and direct them appropriately to HMRC where needed.

Section B Summary Overtime does not carry a higher tax rate, but it can shift earnings into higher tax bands or contribute to personal allowance tapering for higher earners. The resulting increase in deductions reflects the progressive structure of UK income tax, not special treatment of overtime. Employers must apply PAYE in line with the employee’s HMRC-issued tax code and ensure payroll guidance is kept up to date as thresholds change year to year.

Section C: National Insurance on Overtime

National Insurance contributions (NICs) often account for the most noticeable change in deductions when overtime is paid. Unlike income tax, which usually operates cumulatively across the tax year, NICs are calculated on a per-earnings-period basis. This structural difference explains why overtime can significantly increase deductions in a single week or month.

For employers, correct NIC treatment is a statutory obligation under the Social Security Contributions and Benefits Act 1992 and associated regulations. Errors in calculation or reporting can result in HMRC assessments, interest and penalties.

1. How National Insurance is calculated on overtime

Overtime forms part of an employee’s gross earnings for Class 1 NIC purposes. It is not treated separately. All overtime payments — including enhanced premiums — are included in the earnings figure for the relevant pay period.

Employee Class 1 NICs are calculated on earnings above the Primary Threshold for that pay period. Employer (secondary) Class 1 NICs are payable on earnings above the Secondary Threshold. These thresholds and rates are set annually and may differ depending on whether payroll operates weekly, monthly or otherwise.

Because NICs are calculated per earnings period:

• There is no cumulative year-to-date recalculation
• Each week or month stands alone
• Increased earnings in one period immediately increase NIC deductions

If an employee works significant overtime in a single month, their NIC liability will rise for that month only. If earnings return to normal in the following period, NIC deductions reduce accordingly.

Payroll systems must ensure the correct earnings period is used and that thresholds align with the pay frequency. Although the Primary Threshold may broadly align with the income tax personal allowance in certain tax years, this is not a fixed legal rule and may vary.

2. Why NICs fluctuate more than income tax

The non-cumulative structure of NICs means fluctuations are more visible than income tax changes.

Income tax under a cumulative code smooths deductions across the year. If an employee pays slightly more tax in one period, future periods may rebalance automatically. NICs do not operate this way. Higher pay in a given week or month directly increases NIC for that period, without any year-to-date adjustment.

Additionally:

• NIC rates differ across earnings bands
• Upper earnings limits affect the percentage applied
• Thresholds and rates are subject to annual legislative change

These features mean overtime-heavy pay periods often show noticeably higher NIC deductions compared to standard pay months. Employers should be prepared to explain this distinction clearly to staff, as confusion frequently arises from the visible difference between tax and NIC calculations shown on a payslip or in PAYE breakdowns.

3. Employer NIC liability and budgeting

Overtime does not only affect employees. Employers must also pay secondary Class 1 NICs on overtime earnings above the relevant threshold.

For organisations with regular or seasonal overtime patterns, this can materially increase payroll costs. Employers should factor into budgeting:

• Secondary NIC on enhanced overtime premiums
• The impact of fluctuating staffing demands
• Cash flow implications during high-overtime periods

Failure to account for employer NIC exposure can distort labour cost projections, particularly in industries reliant on variable shift patterns.

Payroll must ensure overtime is fully reflected in Real Time Information submissions, as HMRC reconciles employer NIC liability through these reports. Robust payroll processes reduce the risk of compliance disputes and associated claims, including allegations of unlawful deduction of wages where errors affect take-home pay.

Section C Summary Overtime is fully subject to Class 1 National Insurance contributions for both employees and employers. Because NICs are calculated on a non-cumulative, period-by-period basis, overtime can cause noticeable fluctuations in deductions. Employers must ensure payroll systems apply the correct thresholds and earnings periods, and must account for increased secondary NIC costs when budgeting for overtime-heavy operations.

Section D: Overtime Tax Codes and Emergency Tax

Overtime does not operate in isolation within payroll. Its interaction with tax codes is often the trigger for employee queries and payroll risk. While overtime itself does not generate a new tax code, increased earnings can prompt HMRC to adjust coding in-year. Employers must understand how coding operates and apply changes strictly in accordance with HMRC notices.

1. Can overtime change an employee’s tax code?

Overtime does not automatically alter a tax code. Tax codes are issued by HMRC and reflect the employee’s personal allowance position, adjustments for benefits in kind, underpayments from prior years and other income-related factors.

However, if overtime materially increases projected annual income, HMRC may revise the employee’s code. This typically occurs where:

• Higher earnings reduce or remove the personal allowance
• Income crosses into a higher tax band
• Prior underpayments need to be collected through coding
• Benefits in kind become taxable at higher levels

HMRC issues updated codes electronically via P6 (in-year changes) or P9 (start-of-year notices). Employers are legally required to apply these codes from the effective date specified. Failure to implement coding notices promptly can lead to incorrect deductions and year-end reconciliation issues.

Payroll must never estimate or alter tax codes independently based on overtime levels. Only HMRC has authority to issue or amend codes. Administrative identifiers such as the employee’s payroll number should be used accurately to ensure coding notices are matched to the correct individual record.

2. Emergency tax and overtime

Emergency tax situations commonly arise when:

• A new employee does not provide a P45
• The starter checklist is incomplete
• Payroll does not have sufficient previous pay data

In such cases, payroll may apply codes such as 1257L W1/M1 or 0T W1/M1. The “Week 1/Month 1” marker means tax is calculated on a non-cumulative basis. The 0T code provides no personal allowance for the period.

When overtime is paid during an emergency tax period, deductions may appear significantly higher. This is not because overtime is taxed differently, but because the code restricts or removes personal allowance for that period.

Once HMRC confirms the correct tax position and issues the appropriate cumulative code, payroll usually adjusts automatically. Overpaid tax is typically refunded through subsequent pay periods, provided the correction occurs within the same tax year. Employees reviewing their PAYE on payslips may see this adjustment reflected in revised cumulative figures.

3. Common payroll errors involving overtime and tax codes

Variable earnings increase the risk of payroll errors if systems are not managed correctly. Common issues include:

• Applying a non-cumulative code incorrectly
• Failing to action P6 or P9 notices promptly
• Misunderstanding the interaction between projected earnings and coding adjustments
• Attempting manual tax adjustments at employee request

Employers must apply PAYE strictly in accordance with HMRC instructions. Tax deducted from overtime cannot be manually reduced, delayed or reallocated. Any attempt to override system calculations risks non-compliance.

Where employees dispute deductions, the appropriate course is to direct them to HMRC to review their tax code. Payroll’s role is to implement the code issued, not to determine individual tax liability.

Section D Summary Overtime does not itself change tax codes, but increased earnings may trigger HMRC coding adjustments. Employers must apply P6 and P9 notices accurately and avoid manual intervention in PAYE calculations. Emergency tax situations can exaggerate the impact of overtime deductions, but corrections are usually made once the proper code is issued. Accurate starter procedures and prompt coding updates are essential for compliance.

Section E: Overtime and Other Payroll Deductions

Overtime increases gross earnings, and this has consequences beyond income tax and National Insurance. Many statutory and contractual deductions are earnings-based. When pay rises in a particular period due to overtime, associated deductions may also increase. Employers must ensure payroll systems apply these correctly and be prepared to explain the interaction to employees.

1. Student loan repayments

Student loan repayments are calculated through payroll where an employee’s earnings exceed the relevant repayment threshold for their loan plan. The applicable plan type — Plan 1, Plan 2, Plan 4 or Postgraduate Loan — determines both the threshold and the repayment percentage.

Repayments are calculated on earnings above the threshold for the pay period. Overtime increases gross earnings, which may result in:

• Higher repayment deductions for that period
• Repayments triggered in months where standard earnings alone would not exceed the threshold

Like National Insurance, student loan deductions are calculated on a non-cumulative basis. If earnings fall below the threshold in a later period, no repayment is due for that period.

Employers must apply deductions strictly in accordance with the employee’s plan type as notified by HMRC. Payroll must not alter or suspend repayments because an employee queries the impact of overtime. Any challenge to repayment liability must be directed to HMRC or the Student Loans Company.

2. Pension contributions

Overtime may also affect pension contributions under automatic enrolment and occupational pension schemes.

Under automatic enrolment legislation, qualifying earnings include salary, wages, commission and bonuses within defined thresholds. Overtime forms part of qualifying earnings where it falls within the statutory definition, unless the scheme uses an alternative pensionable pay basis permitted by law.

As a result:

• Employee contributions may increase during overtime-heavy periods
• Employer contributions may rise correspondingly
• Earnings may exceed scheme thresholds, affecting contribution calculations

Where pension contributions are calculated on basic pay only, scheme rules must be clear and consistently applied. Employers should review pension scheme documentation to confirm whether overtime is included in pensionable pay. Incorrect treatment of overtime in pension calculations can result in underfunding, backdated liabilities and regulatory exposure.

3. Attachment of earnings orders and other statutory deductions

Attachment of earnings orders (AEOs), deduction of earnings orders (DEOs) and similar enforcement mechanisms are also linked to earnings levels.

Where overtime increases net earnings, it may:

• Increase the amount deducted under a percentage-based order
• Move the employee into a higher deduction band under protected earnings rules

Payroll must apply these orders strictly in accordance with the instructions received from the issuing authority. Employers cannot adjust deductions to offset increased tax or NIC arising from overtime.

Other earnings-linked deductions, such as legacy childcare voucher arrangements or certain salary sacrifice adjustments, may also fluctuate when gross pay changes. Clear explanation on the employee’s payslip abbreviations and deduction lines can help reduce confusion.

Section E Summary Overtime affects more than income tax and National Insurance. It can increase student loan repayments, pension contributions and statutory enforcement deductions. Employers must ensure payroll systems apply all earnings-linked deductions correctly and consistently, and should provide clear payslip explanations to minimise disputes.

Section F: Overtime and Employment Law Compliance

Although overtime tax is primarily a payroll issue, overtime itself has important employment law implications. Employers must distinguish clearly between how overtime is treated for tax purposes and how it is treated for statutory pay rights. Confusing these concepts can create compliance risk in areas such as national minimum wage, holiday pay and working time regulation.

1. Overtime and National Minimum Wage

The national minimum wage framework requires employers to ensure that workers are paid at least the statutory minimum hourly rate for all working time.

Overtime hours count as working time for minimum wage purposes. However, the premium element of overtime pay is excluded when calculating remuneration for NMW compliance. In practical terms:

• Basic pay for overtime hours counts toward NMW calculations
• The additional premium element, such as time-and-a-half or double time enhancement, is disregarded when assessing compliance

This means employers cannot rely on enhanced overtime payments to compensate for a shortfall in basic hourly pay. If a worker’s core rate falls below the statutory minimum, paying overtime at an enhanced rate does not remedy the breach.

Payroll and HR systems must therefore distinguish between the total overtime payment for tax purposes and the elements of pay that count toward minimum wage compliance. Failure to do so can result in HMRC enforcement action, financial penalties and reputational exposure.

2. Overtime and holiday pay

Overtime may also affect statutory holiday pay calculations under the Working Time Regulations 1998.

Case law, including Bear Scotland Ltd v Fulton and East of England Ambulance Service NHS Trust v Flowers, established that certain overtime payments may form part of “normal remuneration” where they are sufficiently regular and settled.

In particular:

• Guaranteed overtime must generally be included in holiday pay
• Non-guaranteed overtime that the employee is required to perform may be included
• Regular voluntary overtime may also need to be reflected in holiday pay if it forms part of normal pay patterns

For further detail, see holiday pay on overtime and guidance on voluntary overtime.

This employment law treatment has no bearing on tax treatment. HMRC taxes all overtime identically regardless of frequency. However, employers must ensure that their payroll systems correctly calculate holiday pay where overtime is part of normal remuneration.

Incorrect exclusion of overtime from holiday pay calculations may lead to unlawful deduction of wages claims and collective liabilities. Employers should also be aware of when regular overtime arrangements risk becoming contractual, as explored in when regular overtime becomes contractual.

3. Working time limits and record-keeping

Overtime also engages working time compliance obligations. Employers must ensure that total working hours do not breach statutory limits unless valid opt-outs are in place. Questions such as can you be forced to work overtime frequently arise where working time protections are engaged.

Employers must:

• Maintain accurate payroll records for PAYE and NIC purposes
• Submit complete and accurate Real Time Information returns to HMRC
• Keep adequate records to demonstrate compliance with working time limits

Accurate overtime recording is therefore critical not only for tax compliance but also for working time monitoring, rest break compliance and potential tribunal defence. See further guidance on working time record keeping.

Inadequate record-keeping increases exposure to HMRC audit risk and employment claims. Payroll and HR systems should be aligned to ensure that overtime hours, pay rates and approvals are consistently documented.

Section F Summary Overtime has wider employment law consequences beyond tax. It must be assessed carefully for national minimum wage compliance, may affect holiday pay under established case law and requires accurate record-keeping under working time legislation. Employers must treat tax treatment and employment rights treatment as separate but interconnected compliance obligations.

Section G: Managing Overtime Tax Queries

Even where payroll operates correctly, overtime frequently generates employee queries. Fluctuating net pay, visible increases in deductions and unfamiliar tax codes often lead staff to conclude that overtime is taxed unfairly. Employers should approach these concerns with clarity and consistency, grounded in the legal framework governing PAYE and National Insurance.

1. Why employees believe overtime is taxed more

The most common complaint is that overtime is “taxed at 40 percent” or “taxed more than normal pay”. In most cases, this perception arises because:

• Overtime increases total earnings, pushing part of income into a higher tax band
• National Insurance increases for that pay period due to non-cumulative calculation
• Emergency tax codes restrict personal allowance

It is important to explain that UK income tax operates on progressive bands. Only the portion of earnings above a threshold is taxed at the higher rate. The overtime payment itself is not singled out for different treatment.

Clear breakdowns on a payslip, including explanation of payslip abbreviations, can reduce misunderstandings and demonstrate how PAYE has been applied.

2. Explaining fluctuating deductions

Employers should be prepared to explain:

• That PAYE is applied according to HMRC-issued tax codes
• That NICs are calculated per pay period and therefore vary when earnings vary
• That student loan repayments and pension contributions may also increase with higher gross pay

Where employees are on Week 1/Month 1 codes, it should be clarified that tax is not being calculated cumulatively. This can exaggerate deductions in overtime-heavy months until the code is corrected.

Providing simple written guidance to staff about how overtime tax works can significantly reduce repetitive payroll queries and prevent unnecessary escalation.

3. When HMRC refunds or collects additional tax

Where overtime fluctuates significantly over the course of a tax year, PAYE may not perfectly match the employee’s final annual liability.

HMRC conducts end-of-year reconciliations. This may result in:

• A P800 calculation and refund where tax has been overpaid
• An adjustment to the following year’s tax code where tax has been underpaid
• A direct demand in more significant cases

Employers do not conduct this reconciliation. Their duty is to operate PAYE correctly in each pay period and apply any updated tax codes issued by HMRC.

If an employee believes too much tax has been deducted, the appropriate route is to contact HMRC. Payroll cannot retrospectively amend tax deductions without an HMRC instruction.

4. Should employers adjust overtime tax at employee request?

Employers must not manually adjust PAYE to reduce deductions on overtime, even where an employee requests it. PAYE operates strictly under statutory rules. Any alteration outside HMRC instructions risks non-compliance and potential penalties.

Where disputes arise, employers should:

• Confirm the tax code applied
• Verify payroll accuracy
• Direct the employee to HMRC if they believe their coding is incorrect

Maintaining this boundary protects the employer from liability and ensures compliance with PAYE Regulations.

Section G Summary Most overtime tax disputes stem from misunderstanding rather than payroll error. Employers should provide clear explanations of progressive tax bands, non-cumulative NIC calculations and HMRC coding rules. PAYE must be applied strictly in accordance with HMRC instructions, and manual adjustments at employee request are not permitted.

FAQs

Is overtime taxed at a higher rate in the UK?
No. Overtime is taxed in exactly the same way as ordinary earnings. Higher deductions may arise because total income for the period crosses into a higher tax band.

What is the overtime tax rate UK?
There is no specific overtime tax rate. Overtime is subject to the standard income tax rates applicable to the employee’s total taxable earnings.

Why is my overtime taxed at 40 percent?
If overtime pushes part of your earnings above the higher-rate threshold, that portion is taxed at the higher rate. The rate applies to income above the threshold, not specifically to overtime.

Does overtime affect my tax band?
Overtime can increase total earnings, which may move part of your income into a higher tax band for that pay period or across the tax year.

How does overtime affect National Insurance?
NICs are calculated per pay period. Higher earnings due to overtime increase NIC deductions in that specific period.

Can overtime change my tax code?
Overtime does not directly change your tax code. However, if higher earnings affect your projected annual income, HMRC may issue a revised code.

Does overtime increase student loan repayments?
Yes. Student loan deductions are based on earnings above the relevant threshold for the pay period. Overtime increases gross earnings and may increase repayments.

Does overtime count toward National Minimum Wage?
Overtime hours count as working time, but the premium element of overtime pay cannot be used to remedy a shortfall in basic pay for NMW compliance.

Conclusion

Overtime tax in the UK is governed by the same statutory framework that applies to all employment income. There is no separate overtime tax rate. Overtime is treated as ordinary earnings under the Income Tax (Earnings and Pensions) Act 2003 and is subject to PAYE income tax and Class 1 National Insurance contributions.

Fluctuations in deductions arise because higher earnings may cross tax or NIC thresholds, not because overtime is taxed differently. Employers must ensure that overtime is processed accurately through payroll, included in Real Time Information submissions and calculated using the correct HMRC-issued tax code.

Beyond tax, overtime has implications for national minimum wage compliance, holiday pay calculations and record-keeping duties under working time legislation. These employment law considerations operate separately from PAYE but must be managed in parallel.

For employers, strong payroll systems, accurate coding implementation and clear communication with employees are central to compliance. Overtime itself is straightforward in law. The complexity lies in how increased earnings interact with progressive tax bands, non-cumulative National Insurance and other statutory deductions. When these mechanisms are properly understood and applied, overtime tax need not be a source of dispute or risk within the organisation.

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