How much can you earn per month before paying tax?

A monthly-paid employee can earn £1,048 in a month before income tax is due, and National Insurance starts at the same £1,048, so the two main payroll deductions share one monthly starting point ^[1]. That figure is one-twelfth of the £12,570 annual Personal Allowance, which employers spread evenly across the year through the PAYE system ^[2].

The monthly figure comes with a twist that the annual number hides. Income tax under PAYE is cumulative, meaning unused allowance from a quiet month carries forward to the next, so the amount someone can earn tax-free in any single month is rarely exactly £1,048. National Insurance works differently, resetting every month, which is why a bonus can be taxed one way and National Insurance another in the same payslip.

This article explains the £1,048 monthly threshold, how the cumulative system rolls unused allowance forward, why an emergency tax code changes the monthly figure, what happens in a month with a bonus, and how an employer's payroll applies all of this automatically each pay run.

Key takeaways

• A monthly-paid employee can earn £1,048 before income tax, the monthly share of the £12,570 Personal Allowance ^[2].
• National Insurance also begins at £1,048 a month for the 2026-27 tax year, aligned with the income tax threshold ^[1].
• PAYE income tax is cumulative, so unused monthly allowance carries forward and the tax-free amount changes month to month ^[3].
• An emergency tax code applies month 1 in isolation and ignores earlier pay, which can distort the monthly figure ^[4].
• National Insurance resets each month and is not cumulative, unlike income tax ^[5].

The £1,048 monthly threshold

The Personal Allowance of £12,570 is the income a person can receive in a tax year without paying income tax, and for a monthly-paid employee the payroll divides it into twelve equal shares of £1,048 ^[2]. A weekly-paid employee gets the same allowance in 52 slices of £242, and a four-weekly payroll uses £968 each period ^[1]. The point of spreading the allowance is to smooth the tax across the year rather than letting an employee earn the whole allowance first and then face a large deduction later.

National Insurance for an employee begins at the same monthly figure. The Primary Threshold for the 2026-27 tax year is £1,048 a month, and earnings above it up to £4,189 a month attract employee National Insurance at 8%, with 2% on anything above that ^[5]. Because income tax and National Insurance now share the £1,048 starting line, a monthly salary below that figure carries neither deduction ^[1]. The table sets out the monthly thresholds that matter on a payslip.

The employer pays earlier

The employer starts paying National Insurance on a salary long before the employee does. Employer National Insurance is charged at 15% on monthly earnings above the Secondary Threshold of £417, equivalent to £5,000 a year, and that rate rose from 13.8% on 6 April 2026 ^[5]. A business paying a modest monthly wage therefore faces a National Insurance bill even where the employee takes home their pay free of deductions ^[1]. This is a common surprise for a small firm running its first payroll on HMRC-recognised payroll software for SMEs.

Why the monthly figure is not fixed

The £1,048 monthly allowance is a starting point, not a fixed ceiling, because PAYE income tax is cumulative. Every payday the payroll works out the tax due on earnings for the year to date, subtracts the tax already paid, and deducts only the difference ^[3]. In practice this means the allowance for each month is added to any allowance left unused in earlier months, so the tax-free amount available in a given month depends on what came before ^[10].

An example makes this concrete. Someone who earns £978 in April uses only part of that month's £1,048 allowance, leaving £70 spare. In May they receive a fresh £1,048 plus the £70 carried forward, so they can earn £1,118 before any income tax is due ^[3]. This roll-forward continues throughout the year, which is why a person with variable pay can go several months without paying tax and then start paying once their cumulative earnings overtake their cumulative allowance ^[10]. The table shows the effect over two months.

National Insurance does not roll forward

National Insurance behaves in the opposite way for most employees. It is assessed on each month in isolation, so unused threshold in a low month is lost rather than carried forward ^[5]. An employee who earns nothing in one month and a large amount the next pays National Insurance only on the high month's excess over £1,048, with no credit for the empty month ^[1]. This split behaviour, cumulative income tax alongside non-cumulative National Insurance, is one of the trickier parts of a payslip and a reason employers lean on software rather than manual tables ^[3].

How an emergency tax code changes the monthly figure

The cumulative system relies on the payroll knowing an employee's pay and tax so far in the year. When that information is missing, usually because a new starter has not provided a P45, the employer applies an emergency tax code ^[4]. An emergency code operates on a month 1 basis, which means it gives one month's allowance of £1,048 each payday but ignores everything earned earlier in the year ^[4].

For a straightforward new job, an emergency code often produces roughly the right tax, because the employee simply gets £1,048 tax-free each month. The problem appears when the employee had a gap in employment or a low-earning start to the year, because the month 1 basis cannot hand back the unused allowance the cumulative system would have carried forward ^[6]. The result can be too much tax deducted in the early months, which is corrected once HMRC issues a cumulative code ^[7]. The table contrasts the two bases.

Getting overpaid tax back

An employee who has overpaid under an emergency code does not usually need to chase a separate refund. Once HMRC receives the employee's details through Real Time Information and issues the correct cumulative code, the overpaid tax is repaid through the next payslip, so the pay packet is higher than usual that month ^[7]. If the overpayment is not resolved within the tax year, HMRC reconciles it after the year ends and repays any excess directly ^[8]. Accountants handling starters across many employers often use a multi-client payroll dashboard to make sure each new joiner moves onto the right code quickly.

What happens in a month with a bonus

A bonus paid in a single month can make a payslip look alarming. Because PAYE spreads tax based on annualised earnings, a large one-off payment in one month is briefly taxed as though that higher level of pay would continue all year, which can push part of it into a higher tax band for that month ^[10]. The cumulative system corrects most of this over the following months as the person's actual annual total settles below the annualised estimate ^[3].

A worked figure shows the scale. An employee on £2,500 a month who receives a £3,000 bonus is paid £5,500 that month, and the payroll briefly treats that as an annualised £66,000, so part of the bonus is taxed at 40% even though the person's real annual pay is around £33,000 ^[10]. Over the remaining months the cumulative calculation claws the excess income tax back, so the annual bill ends up correct ^[3].

National Insurance on a bonus is not corrected in the same way. Because National Insurance is assessed per month and does not roll forward, the full bonus above the monthly threshold attracts National Insurance in the month it is paid, with no later smoothing ^[5]. A bonus is treated as earnings and runs through PAYE with both income tax and National Insurance, unlike some genuine compensation payments ^[15]. Producing an accurate figure for a bonus month is exactly the kind of task where an instant payslip generator removes the manual risk.

The monthly allowance with a second job

The £1,048 monthly allowance is a single amount attached to the individual, not to each job. Someone with two employments does not receive £1,048 tax-free in both, because the Personal Allowance is normally applied against the main job and the second job carries a code such as BR that taxes all of its pay at the basic rate with no allowance ^[13]. This is why a part-time second job can appear to be taxed from the first pound, even though the person's overall pay may still be modest ^[6].

Where the allowance is not fully used by the main job, an employee can ask HMRC to split it across both employments so that some tax-free pay applies to the second one ^[6]. For anyone unsure whether their combined monthly deductions are correct, HMRC provides an online service to estimate the year's income tax and check how the allowance is being used ^[11]. Getting the split right avoids the common outcome of overpaying across the year and waiting for a reconciliation.

The monthly figure in Scotland

A Scottish taxpayer has the same £1,048 monthly Personal Allowance, because the allowance is set UK-wide, but the tax charged above it follows the Scottish bands rather than the rest-of-UK ones ^[2]. Scottish income tax opens with a 19% starter rate before reaching the 20% basic rate, so the tax taken on earnings just above £1,048 a month differs slightly from elsewhere in the UK ^[14]. The payroll applies the correct set of bands automatically once the employee's code carries the Scottish S prefix, so the employee sees the right monthly deduction without intervention ^[6].

How payroll handles the monthly calculation

None of this requires the employee to do arithmetic each payday. HMRC issues a tax code, the employer's software applies the cumulative or month 1 basis as instructed, and the Full Payment Submission reports the result to HMRC in real time ^[9]. Software that carries the HMRC Recognised badge holds the current thresholds and applies the correct monthly figures without manual reconfiguration each April ^[12]. For platforms embedding payroll into their own product, the HMRC-recognised payroll API applies the monthly allowance, the National Insurance thresholds and the tax code basis through a single integration, and the same annual picture is set out in the Moonworkers guide to how much you can earn before paying tax.

Check the tax code behind a monthly payslip

Because the monthly figure depends so heavily on the tax code, an employee unsure why a deduction looks wrong can start with the Moonworkers tax code checker, which explains what a given code means and how it affects the tax-free amount each month.

Conclusion

The monthly answer to how much a person can earn before paying tax is £1,048, but the cumulative nature of PAYE means that figure moves month to month as unused allowance rolls forward. Income tax looks back across the whole year to date, while National Insurance resets every month, and the two behave differently again when a bonus or an emergency code enters the picture. Understanding which mechanism applies explains most of the deductions that puzzle people on a monthly payslip.

For employers, the takeaway is that a correct monthly deduction depends on the right tax code and an accurate cumulative record, both of which are handled automatically by payroll software that reports under Real Time Information. As frozen thresholds pull more monthly earnings into the taxable band each year, the reliability of that monthly calculation matters more than ever, both for the employee checking a payslip and for the business that has to get it right every pay run.

Frequently asked questions

How much can you earn a month before paying tax and National Insurance?

For the 2026-27 tax year, a monthly-paid employee can earn £1,048 before either income tax or National Insurance applies, because the two thresholds are aligned ^[1]. Earnings above £1,048 a month attract income tax at 20% and employee National Insurance at 8% up to £4,189 a month ^[5]. The income tax figure can be higher in a given month if allowance has carried forward from earlier months ^[3].

Why did I pay tax one month and not the next?

This is usually the cumulative PAYE system at work. Income tax is calculated on earnings for the whole year to date, so a month with higher pay can tip cumulative earnings above the cumulative allowance and trigger a deduction, while a quieter month may fall back below it ^[3]. A change of tax code or the end of an emergency code can also shift the monthly figure ^[7].

Why is my first monthly payslip taxed so heavily?

A new starter without a P45 is often put on an emergency tax code, which taxes each month in isolation and cannot use any allowance unused earlier in the year ^[4]. Once HMRC issues the correct cumulative code, any tax overpaid is normally refunded through a later payslip, so the pay packet that month is higher than usual ^[7].

Does a bonus get taxed more because it is paid in one month?

A bonus is briefly taxed as though the higher pay level would continue all year, which can make the deduction in the bonus month look large, but the cumulative system corrects most of the income tax over the following months ^[10]. National Insurance is different: it is charged per month and is not smoothed, so the National Insurance on a bonus is not recovered later ^[5].

Image prompt for Imagen (also in frontmatter)

Documentary-style wide shot, an office administrator at a desk reviewing a stack of monthly payslips beside a desktop monitor showing a payroll screen, soft daylight from a nearby window, plants and a coffee cup on the desk, muted palette of warm grey, teal and paper white, off-centre composition with the subject in the left third, shot on a Leica Q3 at 28mm f/2.8, photojournalism, 35mm film grain, no AI artefacts, no warped hands, no warped text, landscape orientation 16:9.