Information the UK tax and National Insurance system

Below is some general information about the UK tax system and also some information specific to supply teachers.

UK tax and the PAYE system

Most people working in the UK will pay tax through the Pay As You Earn system or PAYE for short. The system is designed to prevent people being presented with one large tax bill at the end of the year by deducting an appropriate amount of tax from each payment that is made by an employer, whilst taking into account any tax allowance or other allowances. For most employees, the majority of which earn around the same amount each month, the system works quite well and at the end of a financial year the amount of tax paid amounts to the correct proportion of the earned income.

However, for teachers who work on supply contracts, the amount of tax paid is often higher than they should be paying. There are several reasons for this:
  • The teacher is on the incorrect tax code
  • The assumed earnings for PAYE purposes are higher than actual earnings
Advice on these situations can be found below.

Incorrect tax codes

When you start a new job, your employer has to allocate a tax code to you according to the rules laid down by Her Majesties Revenue and Customs (HMRC). This is usually found on the P45 tax form that was given to you by your previous employer, however there are some circumstances where you will not have a P45 to give them, for example if this is your first job in the UK or if you have already given the P45 to another employer and this is your second job. In these circumstances the employer has no choice but to use an 'emergency tax' code which usually means you end up paying too much tax!

If for any reason you do not have a P45 form then make sure you give your new employer a completed P46 form. This allows you to explain your reasons for not having a P45 and usually allows them to deduct the correct amount of tax from your earnings. If you have already received your first payslip and aren't sure you're paying the correct amount of tax then click the 'Your tax code and what it means' link below.

Your tax code and what it means

Assumed earnings are higher than actual earnings

The amount of tax deducted each week or month under the PAYE system is based on the assumption that you will earn the same amount each month throughout the year. This is clearly no the case for supply teachers who often have little or no income over the school holidays. Because of this your annual income assumed by HMRC is higher than you actually earn and so many supply teachers end up paying too much tax. There is little your employer can do about this but you can reclaim the overpaid tax when you leave a job or at the end of a financial year. To find out how much tax you should have paid then click on the link below and enter the details from your last pay slip, P45 or P60 form.

Calculate how much tax you should be paying