Let’s be honest tax isn’t the most exciting topic in the world. But understanding how it works can save you money, prevent nasty surprises in your payslip, and stop you panicking when you see a random code like “1257L” or “BR” next to your name.
Whether you’re starting a new job, working through an agency, or just trying to make sense of your payslip, here’s everything you need to know about how tax works in Northern Ireland.
1. Who Pays Tax in Northern Ireland?
If you earn money from work whether you’re full-time, part-time, or temporary you’ll likely pay tax on your income.
The key players here are:
- Employees (that’s you): You pay Income Tax and National Insurance Contributions (NICs) on your earnings.
- Employers (that’s your company or agency): They’re responsible for deducting these amounts from your wages before you’re paid.
- HM Revenue & Customs (HMRC): The UK government department that collects the tax.
You’ll see these deductions clearly listed on your payslip each week or month.
2. What’s a Tax Code, and Why Does It Matter?
Your tax code tells your employer how much tax-free income you’re entitled to before deductions begin.
For example:
- The standard tax code for most people in 2025 is 1257L.
- This means you can earn £12,570 per year before paying any Income Tax.
- Anything you earn above that amount will be taxed at the appropriate rate.
Your tax code can change depending on your situation, things like:
- Having more than one job
- Getting benefits through your employer (like a company car)
- Underpaying or overpaying tax in previous years
- Changes in your personal allowance or tax-free income
If you’ve ever seen codes like BR, D0, or K, it usually means HMRC thinks you’ve got another source of income or they’re adjusting for something else. Don’t ignore those, always double-check with HMRC or your payroll contact.
3. Important Note: Employers Don’t Make Up Tax Codes
This one’s important. If you ever think your tax code looks wrong, please remember employers and recruitment agencies do not set or change your tax code.
We use exactly what HMRC sends us. When you start a new job, HMRC provides your employer with the tax code linked to your National Insurance number. That’s what your payroll team uses to calculate your tax.
If your tax code isn’t right, your employer can’t manually change it, only HMRC can. So, if you’ve got questions about your code, the best thing to do is contact HMRC directly:
- Visit www.gov.uk/check-income-tax-current-year
- Or call 0300 200 3300
They can review your details and issue a corrected code straight to your employer.
4. How Does PAYE Work?
PAYE stands for Pay As You Earn. It’s the system HMRC uses to collect tax and National Insurance straight from your wages before you get paid.
Here’s how it flows:
- You work and earn wages.
- Your employer (or agency, if you’re on assignment) uses your tax code to calculate how much tax and NIC to take off.
- They send that money to HMRC on your behalf.
- You receive the rest as your take-home pay.
It’s automatic. You don’t have to file anything unless you have extra income outside your job (like self-employment or rental income).
5. Tax Rates in Northern Ireland
Northern Ireland follows the UK-wide tax bands, so your tax rate depends on how much you earn in total per tax year (April to April).
| Band | Income Range (2025/26) | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Remember, you only pay the higher rates on the part of your income that falls into that band.
6. National Insurance (NI) – The Other Deduction
National Insurance Contributions (NICs) fund things like the NHS, state pension and maternity pay.
If you earn over £1,048 per month (or £12,570 per year), you’ll pay 8% on earnings above that threshold.
Your employer also pays a contribution on top but that’s their problem, not yours.
7. Common Tax Code Confusions
Here’s a quick cheat sheet:
| Tax Code | What It Means |
| 1257L | Standard tax code for this tax year: you get full personal allowance |
| BR | Basic Rate: all income taxed at 20% (often used for a second job) |
| D0 | All income taxed at 40% (used if you’ve already used up your allowance elsewhere) |
| K | You owe tax from previous years or get certain benefits that reduce your allowance |
| Emergency Tax (1257L W1/M1) | Temporary code used when your tax details aren’t confirmed yet |
If you’re on an emergency or unusual code, it’s not the end of the world — it just means HMRC hasn’t received full info from your new employer yet. Once it’s updated, your pay will be corrected.
8. What If I Think I’m on the Wrong Code?
Check your payslip or log in to your HMRC online account to see what tax code you’re on.
If something looks off, you can contact HMRC directly:
- Visit www.gov.uk/check-income-tax-current-year
- Or call HMRC on 0300 200 3300
They can fix errors and issue an updated code to your employer.
9. Final Word: Don’t Panic, Just Check
Tax isn’t meant to be mysterious though it sometimes feels that way. If your take-home pay looks lower than expected, it’s worth checking your tax code first before assuming payroll’s gone rogue.
And remember, at Ashton Recruitment, we’re not just here to match you with great roles we’re here to help you understand the world of work, too. If you’ve got questions about how your pay works or what your tax code means, just ask your consultant. We’ll happily help you make sense of it all.
Common Questions About Tax Codes
Why am I on emergency tax?
Usually because HMRC hasn’t yet received your full details from your new job. It’s common when you start work without a P45 or before your employer has your correct information. It’ll sort itself once HMRC updates your code and any overpaid tax will be refunded automatically.
What happens if I have two jobs?
You’ll only get your full tax-free allowance applied to one job (usually your main one). The second job often uses a BR or D0 code, which means you’ll pay tax on all income from that job.
I’ve left a job and started a new one, what happens to my tax code?
Your new employer will use your P45 to get the correct tax details from your previous job. If you don’t provide a P45, they’ll use an emergency code temporarily until HMRC sends an update.
Can my employer change my tax code for me?
No, employers and agencies are legally required to use the code HMRC issues. Only HMRC can amend your tax code.
How do I get a tax refund if I’ve overpaid?
If HMRC spots that you’ve overpaid, they’ll usually send a refund automatically. You can also claim online via your personal tax account at www.gov.uk/personal-tax-account.