UK Salary Calculator 2025/26

Your take-home pay is what hits your bank account after tax, National Insurance, and any other deductions. For the 2025/26 tax year, you get £12,570 tax-free through your personal allowance. After that, you pay 20% basic rate up to £50,270, then 40% higher rate up to £125,140, and 45% additional rate on anything above. Scottish taxpayers have different bands with rates ranging from 19% to 48%.

National Insurance works differently from Income Tax. You pay 8% on earnings between £12,570 and £50,270, then just 2% on earnings above that. Unlike tax, there is no NI-free allowance that matches your personal allowance. Your employer also pays NI at 13.8% on top of your salary, though this does not reduce your take-home.

If you have a student loan, repayments are taken automatically through PAYE. The rate is 9% of earnings above your plan threshold (or 6% for Postgraduate loans). Plan 2 borrowers (those who started university after 2012 in England or Wales) have a threshold of £28,470. Plan 1 and Plan 4 thresholds are lower. Repayments stop once your loan is fully repaid or written off after 30-40 years depending on your plan.

How pension contributions affect your pay

Pension contributions through salary sacrifice reduce your gross salary before tax and NI are calculated. This means you save both Income Tax and National Insurance on every pound you contribute. A £100 pension contribution through salary sacrifice costs a basic rate taxpayer just £68 net (saving 20% tax plus 8% NI plus employer NI). For higher rate taxpayers, the saving is even greater at 40% plus 2% NI.

Auto-enrolment means most employees are automatically enrolled in a workplace pension. The minimum contribution is 8% of qualifying earnings, with at least 3% from your employer. Many employers offer to match additional contributions, which is essentially free money for your retirement.

The 60% tax trap explained

Earning between £100,000 and £125,140 creates a 60% effective tax rate. For every £2 you earn above £100,000, you lose £1 of personal allowance. This means the 40% higher rate effectively becomes 60% (40% tax plus 20% from lost allowance). The trap is fully sprung at £125,140, when your personal allowance is completely eliminated.

The smart strategy is to use pension contributions to reduce your adjusted net income below £100,000. For example, if you earn £110,000, a £10,000 pension contribution restores your full £12,570 personal allowance. You save roughly £6,000 in tax while building your pension. Charitable donations through Gift Aid can achieve the same effect, extending your basic rate band.

Tax codes and checking your payslip

Your tax code tells HMRC how much tax-free income you can have. The most common code is 1257L, which gives you the standard £12,570 personal allowance. Other numbers or letters indicate adjustments like company benefits, underpaid tax from previous years, or marriage allowance. If your tax code seems wrong, you can check it using your Personal Tax Account on GOV.UK and request corrections.