A first payslip is often a teenager’s first genuine encounter with the gap between what they’ve earned and what actually lands in their bank account - often arriving around the same time as their first bank card and an introduction to credit and debt - and a bit of preparation makes the initial confusion considerably less alarming.
The Personal Allowance: most teenagers won’t pay Income Tax at all
The Personal Allowance - the amount anyone can earn before paying Income Tax - is £12,570 for 2026/27. Many teenagers working part-time alongside school or college earn well under this threshold across the tax year, meaning no Income Tax is actually due at all, even though tax may still be deducted from individual payslips if their earnings are uneven across the year (see below).
Why tax might still be deducted even under the annual threshold
PAYE (Pay As You Earn) calculates tax based on each pay period, assuming a consistent income across the year - a teenager who earns unevenly (a lot in a few busy weeks, little in others) might have tax deducted in a high-earning pay period even though their total annual earnings stay under the Personal Allowance. This is refundable, either automatically at the end of the tax year or by contacting HMRC directly, and is worth explaining upfront so an unexpected deduction doesn’t feel like a permanent loss.
National Insurance: a separate deduction with its own threshold
National Insurance is calculated separately from Income Tax, with its own threshold (the primary threshold, £12,570 for 2026/27, aligned with the Personal Allowance) - most teenagers working modest part-time hours won’t earn enough to pay NI either, but it’s worth explaining as a distinct deduction from Income Tax, since payslips list them separately and the difference is a common source of confusion.
Getting the tax code right
A new employee, including a teenager in their first job, may be placed on an emergency tax code if their previous employment details aren’t yet available to the new employer - this can result in more tax being deducted than is actually due, refundable once the correct tax code is applied. Completing a starter checklist (previously known as a P46) accurately when starting a new job helps avoid this, or at least means any over-deduction is corrected more quickly.
Payslip literacy: what the numbers actually mean
- Gross pay - total earnings before any deductions.
- Income Tax - deducted if earnings for the year (or the specific pay period, see above) exceed the relevant threshold.
- National Insurance - a separate deduction, funding State Pension and certain benefit entitlements.
- Pension contributions - if auto-enrolled (see our Pensions series article on auto-enrolment, though most very part-time or under-22 workers won’t be automatically enrolled).
- Net pay - what actually lands in the bank account, after all deductions.
Why a first payslip is a genuinely valuable teaching moment
Walking through an actual payslip together - rather than discussing tax and NI in the abstract - makes concepts that otherwise feel distant and theoretical concrete and immediately relevant, connecting directly to money the teenager has just earned themselves.
Self-employment and side hustles: a different set of rules
If a teenager earns money through self-employment (tutoring, selling items, freelance work) rather than employment, different rules apply - earnings over £1,000 in a tax year generally need to be declared to HMRC via Self Assessment, even if the total remains under the Personal Allowance and no tax is ultimately due. This is a genuinely easy detail for both teenagers and parents to overlook, since it doesn’t work the same way as employed PAYE earnings.
The bottom line
A first payslip is an ideal, concrete opportunity to explain how Income Tax, National Insurance, and tax codes actually work - most teenagers working modest part-time hours won’t owe significant tax, but understanding why deductions appear, and what to do if an emergency tax code causes an over-deduction, avoids unnecessary confusion or worry over what’s usually a straightforward, refundable situation.
This article is provided for general information and does not constitute tax advice. Tax codes and thresholds can change. If unsure, check gov.uk or contact HMRC directly.
Sources
- GOV.UK Income Tax and PAYE guidance
- HMRC starter checklist guidance
- HMRC Self Assessment guidance for self-employment.
