What happens to my tax when I change jobs mid-year?

This guide explains what happens to your tax when you change jobs in the middle of the UK tax year. It covers P45s, tax codes, PAYE adjustments, overpayments and underpayments so you know what to expect.

Changing jobs in the middle of the tax year is very common but it often creates confusion about how tax is calculated, whether you will overpay or underpay, and how your PAYE records move from one employer to the next. I speak to people all the time who worry that a new job will cause tax problems or unexpected bills. The truth is that PAYE is designed to adjust your tax automatically throughout the year as long as the right information moves from your old employer to your new one.

In my opinion the most important thing you can do when changing jobs mid-year is understand how your tax information is transferred and how payroll calculates your cumulative earnings. Once you know this the system becomes far less intimidating and you can spot mistakes early.

This guide explains exactly what happens to your tax when you switch jobs part way through the year, what documents matter, how tax codes work, why some people overpay or underpay during the transition, and what you can do to keep everything correct.

First thing: PAYE follows you, not the employer

The PAYE system is based on your individual tax record with HMRC. This means:

  • Your tax code belongs to you

  • Your personal allowance belongs to you

  • HMRC manages your cumulative income

  • Employers simply follow the instructions they receive

When you change jobs your PAYE history moves with you as long as your old employer submits the correct leaving information and you give your new employer the right documents.

In my opinion this is reassuring because it means tax is not reset when you leave a job. It continues from where you left off.

What actually happens tax-wise when you change jobs mid-year?

Below is a step-by-step explanation of what happens behind the scenes.

Step 1: Your old employer issues a P45

When you finish your job your employer must give you a P45. This document contains:

  • Your taxable pay up to your leaving date

  • Tax already paid this year

  • Your tax code

  • Your leaving date

This information tells your new employer how much you have already earned and how much tax you have already paid.

You should never start a new job without giving your P45 to your new employer unless you absolutely have to.

Step 2: Your new employer inputs your P45 into payroll

Your new employer enters the figures from your P45 into their payroll system. Once this is done your new payroll automatically continues calculating tax based on your cumulative position.

For example:

  • If you earned £16,000 before leaving your old job

  • And you earn £2,000 in your first month at your new job

  • HMRC will see total income of £18,000 so far

This prevents you being taxed twice on the same allowance and helps keep tax accurate across the entire tax year.

Step 3: HMRC updates your records through Real Time Information

Every time your new employer pays you they send Real Time Information (RTI) to HMRC showing:

  • Taxable pay

  • Tax deducted

  • National Insurance

  • Student loan deductions

  • Tax code used

HMRC uses this to keep your cumulative records up to date.

What if you do NOT have a P45?

This is extremely common. It happens when:

  • Your old employer delays issuing your P45

  • You moved from temp work to permanent work

  • You had multiple short term jobs

  • You left a job years ago and never used your P45

  • You lost your P45

If you do not have a P45 you must complete a starter checklist (previously P46).

The starter checklist tells your new employer:

  • Whether you have another job

  • Whether you receive a pension

  • Whether you have a student loan

  • Which tax code to start you on

If the information is incomplete payroll may place you on an emergency tax code temporarily until HMRC sends the correct one.

In my opinion this is where most mid-year tax errors begin, but they are fixable.

What happens to your tax code when you change jobs?

Your tax code usually moves with you. Your new employer uses:

  • The tax code on your P45
    or

  • The tax code HMRC sends directly to them

Common codes include:

  • 1257L: standard code

  • BR: basic rate on all earnings

  • 0T: no personal allowance applied

  • D0: higher rate on all earnings

  • D1: additional rate

If the wrong code is used

You may:

  • Overpay tax

  • Underpay tax

  • Receive reduced take-home pay

  • Receive unusual deductions for a month or two

Most issues correct automatically once HMRC receives updated RTI.

What if you have two jobs at the same time?

If you keep one job and start another:

  • Your main job will use your personal allowance

  • Your second job will usually use BR (basic rate)

This can cause temporary overpayment which HMRC reconciles through your tax code later.

In my opinion you should always review your tax codes when working two jobs because the system is not always perfect at allocating your allowance.

National Insurance when changing jobs mid-year

National Insurance is not cumulative like income tax. It is calculated separately for each job and each pay period.

This means:

  • You might pay NI in both jobs

  • You might pay NI for your new job even if you paid NI earlier in the year

  • The system does not cap NI across multiple employments unless earnings are extremely high

This confuses many people but it is correct under UK law.

Why people often overpay tax when changing jobs mid-year

I often see mid-year job changers worry about tax because their deductions look odd. Here are the most common reasons for overpayments.

1. Emergency tax codes

If payroll does not receive P45 or complete information they may put you on an emergency code temporarily. This reduces your take-home pay until the correct code arrives.

2. Wrong tax code from HMRC

HMRC sometimes uses outdated records especially if:

  • You had previous jobs

  • You claimed benefits

  • You stopped or restarted student loan deductions

  • You received taxable benefits in kind

Once HMRC corrects the code you may receive a refund.

3. Your P45 had incorrect information

Small errors on a P45 can cause tax issues. This happens when:

  • Your old employer miscalculated taxable pay

  • Year-to-date tax figures were wrong

  • Leaving dates were wrong

Your new employer relies on those figures so wrong data leads to wrong tax.

4. You worked variable pay at both jobs

If your income jumped around, PAYE may have deducted tax as if your higher earnings were permanent.

PAYE averages itself across the year so you may receive a refund later.

5. You had multiple jobs earlier in the year

Two employers may have taxed you each as if they were your main job which can cause overpayment.

Why people underpay tax when changing jobs mid-year

It is also possible to underpay tax without realising.

Common reasons:

  • You used full personal allowance at two jobs temporarily

  • Your employer used the wrong tax code

  • HMRC removed part of your allowance after benefits in kind were added

  • Overtime at your new job pushed you into higher tax but PAYE had not caught up yet

If you underpay tax HMRC usually corrects it the following year by adjusting your tax code.

In my opinion underpayments are less common than overpayments but still happen often enough that you should check your payslips.

What happens at the end of the tax year?

If you changed jobs mid-year HMRC performs a reconciliation. They compare:

  • Total earnings

  • Total tax paid

  • Correct tax owed

They do this through your P60s and RTI submissions.

If you overpaid

HMRC issues:

  • A refund directly to your bank
    or

  • A cheque
    or

  • An automatic adjustment through your new tax code

If you underpaid

HMRC usually:

  • Adjusts your tax code to collect the underpayment
    or

  • Sends a payment request if the amount is large

In my opinion the reconciliation process is reliable but you should still check your Personal Tax Account to make sure everything looks right.

What you must do when changing jobs to keep your tax right

1. Always give your new employer your P45

This is the biggest factor in avoiding tax issues.

2. If you do not have a P45, complete the starter checklist accurately

Do not leave any section blank.

3. Check your first payslip at the new job

Look at your tax code and deductions.

4. Sign into your HMRC Personal Tax Account

Verify that your employment history is correct.

5. Keep records

Hold onto your old payslips, your P45 and your first few payslips from your new employer.

6. Report incorrect tax codes to HMRC

Only HMRC can issue new tax codes.

Real world examples

Example 1: No P45

Sophie left a retail job and started in hospitality without a P45. Payroll put her on an emergency code temporarily. After HMRC updated the tax code her next payslip included a refund.

Example 2: Multiple jobs

Danny worked two part time jobs for three months then quit one. Both employers used his allowance which meant he underpaid tax. HMRC corrected this later with a new tax code.

Example 3: Wrong plan type for student loan

Emma changed jobs mid-year and payroll assumed she was Plan 1 instead of Plan 2. Her student loan deductions were too high until it was corrected the following month.

Example 4: Overtime spikes

Sam earned more at his new job for the first two months due to induction overtime which pushed him into higher tax temporarily. PAYE corrected this later and he received a refund.

In my opinion: the key things to remember

If I were giving you the essentials quickly they would be:

  1. PAYE follows you automatically when you change jobs.

  2. Your P45 is the most important document in the process.

  3. Without a P45 your tax may be temporarily too high.

  4. HMRC corrects most errors through your tax code.

  5. Overpaying tax mid-year is very common and often refunded automatically.

  6. You should always check your first payslip at the new job.

  7. Your HMRC Personal Tax Account is the best place to confirm your records.

Changing jobs mid-year should not cause tax problems as long as information is handled correctly.

Final thoughts

When you change jobs mid-year your tax does not reset. It continues based on your cumulative income for the entire tax year. If your P45 is correct and your new employer inputs everything properly the transition is usually smooth. If something is missing you may see emergency tax or unexpected deductions but these are temporary and can be fixed through HMRC.

In my opinion the best approach is simple: give your new employer proper documentation, check your first payslip and review your HMRC Personal Tax Account. With these steps your tax will almost always correct itself automatically.