Key Stage: KS5
Year group: Year 12 / Year 13
Age range: 16–18
Duration: 50 minutes
Subject: PSHE / Economics / Citizenship
Cost: Free

Learning aim

Students can explain how PAYE works in a partial first tax year, recognise an emergency tax code, complete a Starter Checklist correctly, and know when and how to claim a year-end refund.

CURRICULUM National Curriculum links

PSHE Association KS5 H28: the rights and responsibilities of employees, including payslips and tax codes
Citizenship KS5: the legal employment framework and HMRC obligations
Maths KS5: percentage calculations in income-tax contexts

RESOURCES What you'll need

Sample Starter Checklist (HMRC form)
Sample payslip with emergency tax code 1257L W1
Sample P45 (front and back)
UK Tax Drag P60 reading guide for reference
Mini-whiteboards

LESSON Lesson structure (50 minutes)

Opening
HOOK

Ask: "You're 18, starting your first job in September. The tax year starts in April. How much income tax should you pay between September and the following April?" Take 3 answers. The likely answers will be wrong (most will say "about half a year's tax"). Spoiler: the answer depends heavily on your tax code, and many starters overpay.

Direct teach
TEACH

Explain the cumulative PAYE system: tax code 1257L = £12,570 Personal Allowance, divided across 12 months = ~£1,047/month tax-free. If you start mid-year, you accumulate UNUSED Personal Allowance from April-to-start. The system reconciles automatically IF your employer puts you on a cumulative code. But if you don't have a P45 (no prior employment), they'll put you on the Starter Checklist — and may use code 1257L Week 1 / Month 1 (W1/M1) which does NOT credit back-allowance.

Pupils apply
GUIDED

Calculate: an 18-year-old starts a £24,000/year job on 1 October 2026 (6 months into the tax year). With a cumulative code 1257L, by April they will have earned 6 × £2,000 = £12,000 — under the PA. Tax owed: £0. With code 1257L W1/M1: each month treated separately. Monthly PA = £1,047. Monthly pay £2,000 − £1,047 = £953 taxable × 20% = £190.60 tax per month. Over 6 months: £1,143. Difference: £1,143 of overpaid tax.

Stretch / depth
CHALLENGE

Discuss: who reconciles this? Three routes: (1) HMRC automatically recalculates after year-end (P800 letter, refund into bank). (2) The employee can claim mid-year if they leave. (3) Ignore it forever — HMRC may still send a refund, but not guaranteed. Best practice: complete Starter Checklist Statement A (this is your first job in the tax year) — that triggers HMRC to give you the right code immediately.

Close
PLENARY

Each pupil writes one piece of advice for an 18-year-old starting their first job mid-year. Share three. Land on: complete the Starter Checklist truthfully, watch for W1/M1 on your payslip, check your tax code on your P60 at year-end, claim refund if needed.

DIFFERENTIATION Adapting for all learners

Support (working below ARE)

Walk through the Starter Checklist box by box. Don't require independent tax-code calculation; show pre-computed figures. Focus on recognising "is this cumulative or W1/M1?" on a payslip.

Stretch (working above ARE)

Pupils research the difference between Statements A, B, and C on the Starter Checklist. They calculate the implication if a Year 13 student wrongly ticks Statement C (claiming they have other taxable income).

SEND SEND adaptations

For pupils with dyscalculia: focus on conceptual understanding rather than calculation. Use the visual analogy of "the box of monthly allowances" — full year = 12 monthly boxes; mid-year starter has 6 unused boxes that should be returned but only with the right tax code.

EAL EAL support

Vocabulary: "PAYE", "tax code", "Personal Allowance", "emergency code", "cumulative", "Starter Checklist", "P45", "P60". Provide a glossary card. Sentence frames: "My tax code is ___ because ___."

ASSESSMENT Assessment criteria

Pupils can: (1) name the Starter Checklist statements; (2) recognise an emergency W1/M1 code on a payslip; (3) calculate the tax difference between cumulative and W1/M1 codes for a mid-year starter; (4) explain how a refund is claimed.

HOME Homework pack

Three activities to consolidate PAYE mid-year starter mechanics. ~35 minutes.

Starter Checklist walk-through

What pupils do: Complete a (fictional) Starter Checklist for "Jamie, 18, starting their first ever job on 1 November 2026 earning £22,000/year." Mark which Statement (A/B/C) applies.

Expected output: Completed checklist with correct Statement.

Marking guidance: 5 marks — 2 for correct Statement A choice, 3 for accurate completion.

Code comparison

What pupils do: Calculate the income tax paid by November–March (5 months) for a £24,000 starter on (a) cumulative 1257L and (b) emergency 1257L W1/M1.

Expected output: 2 calculations with monthly breakdown.

Marking guidance: 6 marks — 3 per accurate calculation.

Refund process

What pupils do: Explain in 200 words how a UK taxpayer claims a tax refund after the end of the tax year. Mention P60, P800, and the gov.uk Personal Tax Account.

Expected output: 200-word explanation.

Marking guidance: 6 marks — 2 for each key element accurately described.

SAFEGUARDING Classroom safeguarding

Note for teachers: Do not ask pupils about their own family's tax band, salary, or income. Frame all examples through fictional salaries. Be aware some pupils may be unsure of family financial circumstances — focus on the public-spending side of the lesson, not personal income.

ANSWERS Answer key & differentiation

Answer guide

Guided: October starter on £24,000 with cumulative 1257L earns £12,000 by April — under the £12,570 allowance, so £0 tax. On 1257L W1/M1: (£2,000 − £1,047) × 20% = £190.60 a month, £1,143 overpaid across six months.
Homework "Code comparison" (Nov–Mar, five months): cumulative = £0 (£10,000 earned, still under the allowance); W1/M1 = 5 × £190.60 = £953 overpaid.
"Starter Checklist walk-through": Jamie's first ever job = Statement A, which gets the cumulative code immediately.
"Refund process" — full marks mention: the P60 evidencing the year's pay and tax, HMRC's automatic P800 reconciliation after 5 April, and claiming faster via the GOV.UK Personal Tax Account.
Plenary model advice: complete the Starter Checklist truthfully, watch the payslip for a W1/M1 suffix, check the P60, claim any refund.

Support (scaffold)

Give a 12-box allowance strip (≈£1,047 per box); mid-year starters shade the unused April–September boxes to see why cumulative codes refund.
One-look payslip drill: "Does the code end W1 or M1? Then each month stands alone."
Frame: "Cumulative remembers the whole year; emergency forgets everything but this month."

Stretch (challenge)

Quantify the Statement C mistake: a BR-type code taxes every pound at 20% with no allowance — roughly £367 a month on £22,000 versus the correct £0 for a first-job starter.
Trace how a cumulative code self-corrects in the first payslip after HMRC fixes the code, without any claim being made.
Second-job scenario: which statement applies, and why is BR then the right code for job two?

Understanding your first payslip (KS3 · Year 7 / Year 8)
National Insurance — what it is, who pays it (KS3 · Year 8)
Tax codes and emergency tax — decoding the letters and numbers (KS3 · Year 8 / Year 9)
All lesson plans (KS1 · KS2 · KS3 · KS4) →