Your gross salary is very different from what lands in your bank account. Four main deductions reduce take-home: Income Tax (Personal Allowance then 20%/40%/45% bands), Class 1 NICs (8% on earnings £12,570–£50,270, 2% above), pension contributions (auto-enrolment minimum is 5% employee + 3% employer), and student loan repayments if applicable.
The Personal Allowance freeze at £12,570 since 2022 means fiscal drag is pushing more workers into higher bands as wages rise.
Understanding your take-home pay is essential for budgeting, negotiating job offers, and planning your finances. This calculator breaks down exactly how much of your salary goes to Income Tax, National Insurance, pension contributions, and student loan repayments — so you know precisely what lands in your bank account each month.
Every employed worker in the UK sees several deductions on their payslip. Income Tax is calculated using your tax code and the current tax bands — 20% for basic rate, 40% for higher rate, and 45% for additional rate earners. National Insurance is separate from Income Tax and funds the State Pension, NHS, and unemployment benefits. For 2026/27, employed workers pay 8% NICs on earnings between £12,570 and £50,270, and 2% above that.
If you contribute to a workplace pension, that comes out too — but with tax relief meaning every £100 contribution only costs a basic rate taxpayer £80 from their take-home pay. Student loan repayments apply if you earn above your plan's threshold: Plan 2 starts at £28,030, Plan 5 at £26,065, and the postgraduate loan at £21,000.
Your tax code determines how much tax-free income you get. The standard 1257L code gives you the full £12,570 personal allowance. If HMRC issues an emergency tax code (BR, 0T, or W1/M1), you could be overpaying by hundreds of pounds per month. Always check your tax code when starting a new job. Use our Tax Code Checker to decode yours.
Enter your gross annual salary, select your pension contribution percentage, choose your student loan plan, and optionally adjust your tax code. The calculator instantly shows your annual and monthly take-home pay, plus a complete breakdown of every deduction. Use the advanced options to factor in bonuses, overtime, salary sacrifice, or childcare vouchers.
Based on your calculation, here are actionable steps to improve your financial position:
These are general suggestions based on common scenarios. For personalised advice, speak to a regulated financial adviser or accountant.
Your payslip deductions follow a strict order set by HMRC. Understanding this order helps you spot errors and plan your finances accurately.
| Step | Deduction | 2026/27 Rule |
|---|---|---|
| 1 | Pension (Salary Sacrifice) | Deducted before tax. Reduces taxable income. |
| 2 | Personal Allowance | £12,570 tax-free (tapered above £100,000) |
| 3 | Income Tax | 20% / 40% / 45% on remaining income |
| 4 | National Insurance | 8% on £12,570-£50,270; 2% above |
| 5 | Student Loan | 9% (Plan 1-5) or 6% (Postgrad) above threshold |
| 6 | Pension (Relief at Source) | Contributed from net pay; tax relief claimed by provider |
Salary sacrifice is the most tax-efficient pension method because it reduces both your taxable income AND your National Insuranceable earnings. A £100/month sacrifice saves you £20 Income Tax + £8 NI = £28 total, meaning it only "costs" you £72 from take-home pay.
See how different salaries, pension contributions and student loans affect your actual take-home pay. These examples use the standard 1257L tax code.
Tip: At £28,000 you are just £30 below the Plan 2 student loan threshold. A small pay rise to £28,500 would trigger £42.30/year in student loan repayments.
Tip: Increasing pension to 10% (£5,500) would save £1,100 in Income Tax + £220 in NI = £1,320 total tax savings, while only reducing take-home by £4,180.
Critical tip: Between £100,000 and £125,140, you face a 60% marginal tax rate due to the personal allowance taper. A £10,000 pension contribution would save £6,000 in tax — the most efficient tax saving in the UK system.
Understanding your payslip helps you spot errors and ensure you are paying the correct tax. Here is what each item means:
| Payslip Item | What It Means | Check This |
|---|---|---|
| Tax Code | Your personal allowance and any adjustments | Should match your circumstances. Use our Tax Code Checker. |
| Gross Pay (YTD) | Total pay so far this tax year | Check it matches your contract salary × months worked |
| Tax Paid (YTD) | Total Income Tax deducted | Use our calculator to verify the amount is correct |
| Employee NIC | Your National Insurance contributions | Should be 8% on £12,570-£50,270, 2% above |
| Pension (EE) | Your pension contribution | Should match your chosen percentage |
| Student Loan | Student loan deduction | Should match your plan type and threshold |
| Net Pay | What goes into your bank account | This should match our calculator result |
Red flag: If your tax code is BR, 0T, or has W1/M1 suffix for more than 2 months, contact HMRC. You are probably overpaying tax.
Instead of contributing to your pension from your net pay, ask your employer to reduce your salary by the pension amount and contribute it directly. This saves both Income Tax AND National Insurance.
Example: On a £45,000 salary, a £200/month salary sacrifice saves you £40 Income Tax + £16 NI = £56/month. Over a year, that is £672 extra in your pension for the same "cost" to your take-home pay.
If you earn under £12,570 and your spouse is a basic rate taxpayer, you can transfer £1,260 of your unused personal allowance to them. This saves them £252 in tax every year. It takes 5 minutes to apply on GOV.UK. Check if you qualify.
If you work from home by arrangement with your employer, you can claim £6/week tax-free. Over a year that is £312. If your actual costs are higher, you can claim the exact amount with receipts.
If your job requires membership of a professional body (e.g., ACCA, CIPD, RICS, Nursing Midwifery Council), you can claim tax relief on the subscription fee. A £300 subscription saves a basic rate taxpayer £60, a higher rate taxpayer £120.
HMRC issues new tax codes at the start of each tax year. A wrong code is the single biggest cause of overpaid tax. Our Tax Code Checker decodes any UK tax code in seconds.
This calculator uses the following official sources for 2026/27:
All calculations are verified against official HMRC thresholds where available. For complex personal situations, consult a regulated financial adviser or accountant. This calculator provides estimates only — your actual tax position may differ based on individual circumstances.