How take-home pay is worked out
Your employer starts with your gross pay, takes off any salary sacrifice, then deducts Income Tax and National Insurance through PAYE. If you have a student loan, a repayment comes off too. What is left is your take-home pay, sometimes called net pay.
Income Tax and National Insurance are each worked out separately on the same pay, using their own thresholds. They do not stack on top of each other, so you can add them up to see what you pay in total.
A worked example
A salary of £35,000, on the standard 1257L tax code, with no pension or student loan:
- Income Tax20% of £22,430 above the Personal Allowance£4,486.00
- National Insurance8% of £22,430 above £12,570£1,794.40
That is £2,393.30 a month or £552.30 a week. You keep about 82p of every £1 you earn, and 17.9% goes in tax and National Insurance.
Income Tax bands for 2026/27
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Tax is charged in slices. Each band's rate applies only to the part of your income inside it, so a pay rise that takes you into a higher band is only taxed at the higher rate on the part above the line. You can never take home less by earning more.
National Insurance
| Earnings a year | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 to £50,270 | 8% |
| Over £50,270 | 2% |
National Insurance is worked out on each pay period separately, not on the year as a whole. It stops at State Pension age. Your contributions build your entitlement to the State Pension and some benefits.
Take-home pay by salary
| Salary | Income Tax | National Insurance | Take-home a year | A month |
|---|---|---|---|---|
| £20,000 | £1,486 | £594 | £17,920 | £1,493 |
| £25,000 | £2,486 | £994 | £21,520 | £1,793 |
| £30,000 | £3,486 | £1,394 | £25,120 | £2,093 |
| £35,000 | £4,486 | £1,794 | £28,720 | £2,393 |
| £40,000 | £5,486 | £2,194 | £32,320 | £2,693 |
| £50,000 | £7,486 | £2,994 | £39,520 | £3,293 |
| £60,000 | £11,432 | £3,211 | £45,357 | £3,780 |
| £75,000 | £17,432 | £3,511 | £54,057 | £4,505 |
| £100,000 | £27,432 | £4,011 | £68,557 | £5,713 |
| £150,000 | £53,703 | £5,011 | £91,286 | £7,607 |
The share taken in tax and National Insurance rises with income: 10.4% at £20,000, 21.0% at £50,000 and 39.1% at £150,000. See the full breakdown for every salary from £15,000 to £250,000.
What a pay rise is really worth
The rate on your next pound, your marginal rate, decides how much of a rise you keep:
A £3,000 rise from £35,000 adds £2,160 to take-home pay. The same rise from £50,000 adds £1,777.80, because part of it is taxed at 40%. A student loan adds a further 9% above its threshold.
Pensions and salary sacrifice
With salary sacrifice, pension contributions come out before Income Tax and National Insurance, so each £1 in your pension costs you less than £1 of take-home pay.
- Into your pension£1,750
- Fall in take-home pay£1,260
Other workplace pensions give tax relief in different ways, and some do not save National Insurance. The pension tax relief calculator compares them.
Student loan repayments
| Plan | Threshold | Rate |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
On £35,000, a Plan 2 loan takes £505.35 a year and a Plan 5 loan £900, on top of tax and National Insurance. With a Plan 2 loan, 37p of each extra pound goes in deductions. See the Plan 2 calculator for interest and write-off.
The 60% band between £100,000 and £125,140
Above £100,000, you lose £1 of Personal Allowance for every £2 of income, until it is gone at £125,140. Combined with 40% tax, that creates an effective Income Tax rate of 60% in this band, or 62% with National Insurance.
- Into your pension£11,000
- Fall in take-home pay£4,380
Childcare support too
Income over £100,000 also ends Tax-Free Childcare and the funded childcare hours for working parents. Pension contributions that bring your income below £100,000 can restore them.
Scottish taxpayers
Scotland sets its own Income Tax bands and rates on earnings, from 19% to 48%. National Insurance and student loans are the same across the UK.
- Scotland
- £28,704.53 take-home
- Rest of UK
- £28,719.60 take-home
- Scotland
- £38,023.55 take-home
- Rest of UK
- £39,519.60 take-home
On lower and middle incomes, Scottish taxpayers pay about the same as elsewhere: £15 a year more on £35,000. From around £43,660, the 42% higher rate applies, so a Scottish taxpayer on £50,000 takes home £1,496 less a year and pays 50% on each extra pound.
Your tax code
Your tax code tells your employer how much tax-free pay to give you. The standard code is 1257L, meaning £12,570 of tax-free pay. A different code can mean HMRC is collecting tax on benefits such as a company car, taking off underpaid tax, or giving you extra allowances.
| Code | What it means |
|---|---|
| L | The standard Personal Allowance |
| M / N | Marriage Allowance: you receive or give away part of the allowance |
| BR | All pay taxed at 20%, often a second job |
| K | Benefits or debts are larger than your allowance |
| W1, M1, X | Emergency tax: each pay period is taxed on its own |
| S / C prefix | Scottish or Welsh taxpayer |
Our tax code decoder explains any code.
Bonuses and overtime
A bonus or overtime is taxed as ordinary pay, at your marginal rate. A £2,000 bonus on a £35,000 salary adds £1,440 to take-home pay over the year. Because PAYE works on each pay period, a large bonus can look as if it is taxed heavily in the month it is paid, but the tax evens out over the year on a cumulative code.
Reading your payslip
- Gross paySalary, overtime and bonuses before deductions
- Pre-tax deductionsSalary sacrifice pension and other schemes
Lower the pay used for tax and National Insurance.
- Statutory deductionsIncome Tax, National Insurance and student loan
Paid to HMRC.
- Net payWhat reaches your bank
After any other deductions, such as a season ticket loan.
Check the tax code, the tax period and the year-to-date figures. Monthly take-home can vary when you change jobs, get a bonus or move to a new tax code.
Frozen thresholds
The Personal Allowance of £12,570 and the higher rate threshold of £50,270 are frozen until April 2031. As pay rises with inflation, more of it falls into tax and more people move into the higher rate. A pay rise that only matches inflation can leave you slightly worse off after tax.
Terms worth knowing
| Term | What it means |
|---|---|
| Gross pay | Your pay before any deductions |
| Net pay | What you receive after deductions |
| PAYE | Pay As You Earn: how employers collect tax and National Insurance |
| Personal Allowance | Income you can earn before Income Tax, £12,570 |
| Marginal rate | The share of your next £1 that goes in deductions |
| Effective rate | Total deductions as a share of your gross pay |
| P60 | Your yearly summary of pay and tax, given after 5 April |
Checking you pay the right tax
- Check your tax code in your HMRC personal tax account or the HMRC app.
- Compare your P60 with this calculator at the end of each tax year.
- If you have two jobs, make sure only one uses your Personal Allowance.
- Tell HMRC about benefits, such as a company car or medical insurance, that change your code.
- If you think you have overpaid, HMRC can refund it through your code or directly.
Starting a job part-way through the year
When you start a job, give your new employer your P45 from your last one, or fill in a starter checklist. Without it, you may be put on an emergency tax code at first, so your first payslips can show more tax than expected. Once HMRC sends the right code, the extra is usually refunded through your pay. If you start your first job mid-year, you may pay little or no tax at first because the unused allowance from earlier in the year is spread over your remaining pay.
Two jobs
Your Personal Allowance is normally given against your main job. A second job usually gets a BR code, so all of its pay is taxed at 20%. National Insurance is worked out separately for each job, so if both pay under £12,570 you may pay no National Insurance at all. If your main job pays less than the allowance, you can ask HMRC to split it between the two.
Marriage Allowance
If you are married or in a civil partnership and one of you earns less than the Personal Allowance, they can transfer £1,260 of their allowance to the other, as long as the higher earner pays tax at the basic rate. That cuts the couple's tax by up to £252 a year, and you can backdate a claim for up to four years.
Employed or self-employed
Self-employed people pay the same Income Tax but a lower rate of National Insurance, 6% rather than 8%, through Self Assessment rather than PAYE. They can also deduct allowable business expenses. The sole trader tax calculator works out take-home pay from self-employment.
Common questions
Why is my take-home different from the calculator?
Your tax code, benefits in kind, pension type and the month you started a job all affect a real payslip. The calculator assumes a standard code for the full year.
Is the take-home pay figure monthly or yearly?
Both. The calculator shows yearly, monthly, weekly and daily figures. Monthly figures divide the year by 12.
Does National Insurance count towards my pension?
Yes. Each year you pay enough National Insurance counts as a qualifying year towards your State Pension.
Do I pay tax on a pay rise in my first year?
Yes, from the month it starts. PAYE spreads your allowance across the year, so the extra is taxed at your marginal rate.
What if I earn under £12,570?
You pay no Income Tax and no National Insurance, though you may still build National Insurance credits.
Should I join my workplace pension?
Usually yes. Your employer pays in too, and you get tax relief, so each £1 you contribute is worth much more than £1 of take-home.
Is my take-home pay lower in my first month?
It can be, if you are on an emergency tax code or started part-way through a month. It usually evens out once HMRC issues your correct code.
Do I pay tax on my pension contributions?
No. Pension contributions get tax relief, either by coming out before tax or by HMRC adding basic-rate tax to what you pay in.
Does working from home change my take-home pay?
Not directly. If your employer requires you to work from home, you may be able to claim tax relief on extra household costs, but only if they are not reimbursed and you meet HMRC's conditions.