How overtime is worked out
- Basic hourly rate = annual salary ÷ (contracted weekly hours × 52).
- Overtime rate = basic rate × your overtime multiplier: 1.5 for time and a half, 2 for double time.
- Overtime pay = overtime rate × overtime hours.
- What you keep = your take-home with the overtime minus your take-home without it. This captures every deduction at your marginal rate.
At 20% tax plus 8% NI, you keep 72p of every overtime pound. A higher-rate taxpayer keeps 58p, and a Plan 2 borrower above the threshold loses another 9p.
Worked example: 8 hours a month at time and a half
£34,000 salary, 37.5 hours, 8 hours a month at ×1.5, England
The basic rate is £34,000 ÷ 1,950 = £17.44 an hour, so the overtime rate is £26.15. Eight hours a month adds about £209 gross each month and £1,808 a year after deductions.
Overtime after tax£150.66per month
- Overtime before tax
- £209.23per month
- Overtime hourly rate
- £26.15
- You keep
- 72%of each overtime pound
Per year
- Basic hourly rate
- £17.44
- Overtime earned
- £2,510.77
- Extra income tax
- −£502.00
- Extra National Insurance
- −£200.86
- Overtime kept
- £1,807.91
The same overtime on a £55,000 salary is taxed at 40% plus 2% NI, so less of it reaches your bank account even though the overtime rate is higher: £2,356 a year kept from £4,062 earned.
2026/27 points to know
- Income tax bands and the personal allowance are frozen, so overtime is more likely to tip you into the 40% band at £50,271 (or 42% at £43,663 in Scotland).
- The 2% NI rate above £50,270 means higher-rate taxpayers keep a little more of their overtime than the tax rate alone suggests.
- Overtime that pushes adjusted net income over £100,000 loses personal allowance — a 60% effective tax rate in that band.
Tips
- Check your payslip for the overtime rate and hours; mistakes in overtime are common with rota changes.
- Consider time off in lieu (TOIL) if your employer offers it and you are a higher-rate taxpayer: an hour off is worth the same to you before and after tax.
- Pension contributions taken as salary sacrifice reduce the tax and NI on overtime too.