How overtime is paid
Overtime is any work beyond your contracted hours. How it is paid depends entirely on your contract. There is no legal right to a higher rate, but these patterns are common:
| Name | Multiplier | On a £16 basic rate |
|---|---|---|
| Plain time | 1× | £16.00 an hour |
| Time and a quarter | 1.25× | £20.00 an hour |
| Time and a half | 1.5× | £24.00 an hour |
| Double time | 2× | £32.00 an hour |
Many employers use different rates for different times, for example time and a half on weekdays and double time on Sundays and bank holidays. The calculator lets you add a second rate under More options.
Some contracts offer time off in lieu (TOIL) instead of pay, and salaried roles often say that reasonable extra hours are included in the salary. Check your contract or staff handbook.
Finding your basic hourly rate
If you are salaried, overtime is usually based on an hourly rate worked out from your salary:
Hourly rate = yearly salary ÷ (contracted hours a week × 52)
- Hours paid a year37.5 × 521,950
- Basic hourly rate£32,000 ÷ 1,950£16.41
- Overtime rate£16.41 × 1.5£24.62
Some employers divide by a different number of hours, such as 52.14 weeks, or use a figure set out in a collective agreement. The differences are small, but your payslip will follow your employer’s method.
How overtime is taxed
Overtime is taxed like the rest of your pay. There is no separate overtime tax, but because overtime sits on top of your normal pay, it is taxed at your highest rate.
- Income Tax is cumulative across the year. Regular overtime raises your income for the whole year, so the extra tax is spread evenly.
- National Insurance is worked out on each payment. For monthly pay you pay 8% between £1,048 and £4,189 in the month, then 2%. Overtime that takes a month above £4,189 is charged mostly at 2%.
- Student loan repayments are also worked out on each payment, at 9% of pay above the monthly threshold (£2,448.75 for Plan 2).
- Overtime pay£246.15
- Income Tax at 20%−£49.23
- National Insurance at 8%−£19.69
- Student loan (Plan 2, if you have one)9% of the overtime−£22.15
What you keep at each salary
Here is the same 10 hours a month at time and a half, paid every month, at different salaries in England, Wales or Northern Ireland:
| Salary | Overtime pay | You keep | Kept an hour |
|---|---|---|---|
| £32,000 | £246.15 | £177.23 | £17.72 |
| £60,000 | £461.54 | £267.69 | £26.77 |
| £95,000 | £730.77 | £361.03 | £36.10 |
At £95,000, regular overtime takes the year’s income above £100,000, where the tax-free allowance is withdrawn. Part of the overtime is then taxed at an effective 60%, so less than half reaches your bank account.
Scotland
Scottish taxpayers move into the 42% band at £43,663 rather than £50,270, so overtime is taxed more heavily between those two figures. Set where you live under More options.
Regular or one-off overtime
If you work overtime only occasionally, it behaves like a small bonus: the month it is paid shows the extra Income Tax all at once, and the NI and student loan for that month only. Over a full year the Income Tax comes out the same as if the overtime had been spread evenly.
For most basic-rate taxpayers there is little difference. It matters more when a single month’s overtime pushes that month’s pay above the NI upper limit of £4,189, or above the student loan threshold when your normal pay is below it. Switch between regular and one-off in the calculator to see your figures.
Emergency tax codes
If you are on an emergency code (with W1, M1 or X), payroll taxes each payment on its own, and overtime can be over-taxed. Any overpayment is refunded through your tax code or after the tax year ends.
Your rights
- Minimum wage. Your total pay divided by all the hours you work, overtime included, must not fall below the minimum wage. From April 2026 that is £12.71 an hour if you are 21 or over.
- Working time. Most workers cannot be required to work more than 48 hours a week on average, normally measured over 17 weeks, unless they have opted out in writing. Under-18s cannot work more than 8 hours a day or 40 hours a week.
- Compulsory or voluntary. You only have to work overtime if your contract says so. Refusing voluntary overtime should not lead to unfair treatment.
- Holiday pay. Regular overtime usually has to be included when your holiday pay is worked out for the first four weeks of statutory leave, based on the previous 52 weeks.
- Part-time workers are usually paid their normal rate until they have worked more than full-time hours, and the overtime rate after that.
Overtime, pensions and benefits
Whether your pension contribution is taken from overtime depends on the scheme. Many auto-enrolment schemes use “qualifying earnings”, which include overtime, so the same percentage comes off. Others only use basic salary. If a contribution is taken by salary sacrifice it also reduces the tax and NI on the overtime.
Regular overtime can affect means-tested benefits. Universal Credit is assessed on what you are paid each month, so a month with lots of overtime usually means a lower award, and very high earnings can carry into later months. Overtime can also take your income past £60,000, where Child Benefit starts to be clawed back.
Is the extra hour worth it?
The figure that matters is what you keep for each hour. A basic-rate taxpayer on £32,000 working time and a half keeps about £17.72 an hour. That is more than their basic hourly rate before tax, so overtime is genuinely well paid. Above £100,000 it can fall below half of the gross rate.
Before committing to regular overtime, it is worth thinking about:
- Travel, childcare or meal costs that only arise because of the extra hours.
- Whether paying more into your pension would keep you below a threshold.
- How the hours affect sleep, health and the rest of your week.
Unpaid overtime
Many salaried people work beyond their contracted hours without extra pay. That is legal if your contract allows it, but it quietly lowers your real hourly rate.
- Contracted hourly rate£40,000 ÷ (37.5 × 52)£20.51
- Hours actually worked a year42.5 × 522,210
- Real hourly rate£40,000 ÷ 2,210£18.10
For lower earners, unpaid overtime can be unlawful. On a £26,000 salary for 37.5 hours, the hourly rate is £13.33. Add five unpaid hours a week and it falls to £11.76, below the £12.71 National Living Wage. The minimum wage is checked against all the hours you work, so your employer would owe you the difference.
Keep a record
If you regularly work unpaid hours, note your start and finish times. It helps if you ever need to raise a minimum wage or working time concern, or ask for a pay review.
Checking overtime on your payslip
Overtime is often paid a month in arrears, so hours worked in March may appear on April’s payslip. To check it:
- Find the overtime hours and the rate shown, and check the rate is your basic hourly rate times the multiplier.
- Make sure the hours match your own record, including any second rate for Sundays or bank holidays.
- Check the tax for the month has risen by roughly your top rate times the overtime pay: 20%, 40% or more.
- Expect National Insurance to rise by 8% of the overtime, or less if the month’s pay goes above £4,189.
- If you have a student loan, expect 9% of the overtime to go in repayments if the month is above the threshold.
If something is missing, raise it with payroll quickly. Most employers correct underpaid overtime on the next payslip. You can claim unpaid wages through an employment tribunal, normally within three months less one day of the deduction.
Overtime rates at common hourly rates
| Basic rate | Time and a half | Double time |
|---|---|---|
| £12.71 (National Living Wage) | £19.07 | £25.42 |
| £15.00 | £22.50 | £30.00 |
| £18.00 | £27.00 | £36.00 |
| £20.00 | £30.00 | £40.00 |
| £25.00 | £37.50 | £50.00 |
| £30.00 | £45.00 | £60.00 |
After Income Tax and National Insurance, a basic-rate taxpayer keeps 72% of these figures and a higher-rate taxpayer 58%. So time and a half on £20 an hour is worth £21.60 after tax at the basic rate, and £17.40 at the higher rate.
To add up the hours on your timesheet first, the timesheet calculator converts hours and minutes to decimal hours.