Tax, National Insurance and other Deductions
Tax Codes
Tax is calculated based on your tax code and current tax thresholds. Your tax code when starting employment with the university is applied according to either your starter checklist declaration (part of the Personal Details form) or the P45 issued by your previous employer.
Further changes to tax code are issued by HMRC and are directly applied to your Queen Mary payroll record.
Your tax code is usually made up of numbers and letters.
The numbers in your tax code indicate how much tax-free income you get in the tax year. For example, If your tax code is 1257L, it means your allowance is £12,570. It is given to you in equal portions throughout the year so that by the end of the tax year you have received your full allowance. This means the first £1,048 you earn in a month will not be taxed.
The most common tax codes are:
1257L - This is the standard tax code. Most employees will correctly be on this code.
BR - This is basic rate tax code. All your income from QM will be taxed at the basic rate (20%). Typically this is used for employees that have other sources of income, such as another job of an Occupational Pension Scheme.
0T - This is a code that means you have no allowances taken into consideration. It is usually used if we have received no notification of a tax code (via Starter Declaration/P45 or HMRC).
K (followed by numbers) – Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance. A K code is usually applied when there is outstanding tax for prior years or for another benefits. We will only operate this code if advised via a P45 or directly through HMRC.
If you are unsure why you have a K code you should contact HMRC .
For all of the above tax codes (and others), tax is calculated on a cumulative basis. The tax deduction applicable in the current pay period will be calculated based on your total earnings and tax paid to date, in correlation with your tax code.
If your tax code has ‘M1’ at the end
This is called a Month 1 indicator and it means you are on an emergency tax code. Emergency tax codes are usually temporary. The Month 1 indicator means that tax deductions will be calculated solely on your earnings this period, without taking into consideration your earnings and tax paid to date during the tax year.
For more information on tax code, please visit the GOV.UK website or contact the Payroll team.
National Insurance Contributions
National Insurance contributions are a type of direct tax in the UK, deducted from wages and profits, that contribute to the State Pension and other benefits. They are collected alongside income tax through Pay As You Earn (PAYE). NI contributions are not calculated on annual earnings like income tax, but rather on each pay period, which can affect the amount paid, especially for those with irregular income.
You need a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only. Your National Insurance number is a key reference number for various government service and remains the same for life.. It’s made up of 2 letters, 6 numbers and a final letter, such as AB123456C.
You can apply for a National Insurance number if you’ve never had one.
The level of National Insurance contributions you will pay is dictated by your NI category.
National Insurance Contributions Rates
An employee’s Class 1 National Insurance is made up of contributions:
- deducted from their pay (employee’s National Insurance)
- paid by the university (employer’s National Insurance)
The amounts deducted and paid depend on:
- the employee’s National Insurance category letter
- how much of the employee’s earnings falls within each earnings band
Most common National Insurance category letters are:
| Category letter | Employee group |
|---|---|
| A | All employees apart from those in groups B, C, H, J, M, V and Z in this table |
| B | Married women and widows who have a certificate of election form showing they’re entitled to pay reduced National Insurance |
| C | Employees over the State Pension age |
| H | Apprentices under 25 |
| J | Employees who can defer National Insurance because they’re already paying it in another job |
| M | Employees under 21 |
| V | Employees who are working in their first job since leaving the armed forces (veterans) |
| Z | Employees under 21 who can defer National Insurance because they’re already paying it in another job |
Student Loans are part of the Government's financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying.
HMRC is responsible for collecting repayments of these in cases where the borrower is within the UK tax system and no longer in higher education.
Plan and loan types and thresholds
There are currently 4 types of student loans in operation.
With effect from April 2025, the thresholds for making student loan deductions are:
- Plan 1 — £26,065 annually (£2,172.08 a month or £501.25 a week)
- Plan 2 — £28,470 annually (£2,372.50 a month or £547.50 a week)
- Plan 4 — £32,745 annually (£2,728.75 a month or £629.71 a week)
Employees repay 9% of the amount they earn over the threshold for Plan 1, 2 and 4.
- Postgraduate loans — £21,000 annually (£1,750 a month or £403.84 a week).
Employees repay 6% of the amount they earn over the threshold for postgraduate loan.
There are 3 ways that an employer can be instructed to begin to operate a loan deduction:
- Direct instruction from HMRC: HMRC will issue an start notice to instruct operating a Student Loan (Plan 1, Plan 2 or Plan 4) or Postgraduate Loan deduction. The notice will contain the Plan Type that must be operated.
- Instruction from a P45 with the ‘continue student loan’ box completed:
- Instruction from the starter checklist completed by the employee, indicates they are on either a Student Loan Plan or a Postgraduate Loan.
If you think you are on the wrong plan
You can check which plan you’re on by signing in to your Student Loan online account and downloading your ‘active plan type letter’.
The Payroll team can confirm against which plan your deductions apply. If this is different from the plan in your letter, your payroll details can be updated. You can get a refund if you paid back too much of your loan because you were on the wrong plan type.
Stop paying student loan
HM Revenue and Customs (HMRC) will instruct us to stop taking repayments from your salary when you have repaid your loan in full. It can take around 4 weeks for salary deductions to stop.
This means you may pay back more than you owe.
You can avoid paying more than you owe by changing your payments to Direct Debit in the final year of your repayments. Keep your contact details up to date in your Student Loan online account so SLC can let you know how to set this up.
If you have paid too much the Student Loans Company (SLC) will try to:
- contact you to tell you how to get a refund
- refund you automatically (this will appear in your bank account as ‘SLC Receipts’).
You can check your loan balance in your Student Loan online account.
If you’ve overpaid and have not heard from SLC you can ask them for a refund.
The law on workplace pensions requires that, if you are an eligible member of staff or casual worker, QMUL must enrol you into one of its supported pension schemes – this is called automatic enrolment because it is automatic for staff – you do not have to take any action to be enrolled into a pension scheme. Auto-enrolment is intended to encourage you to save into a pension scheme to provide for your retirement.
You have the option to opt out from a workplace pension if you wish.
More details on our pension provision can be found here.