UK Income Tax Calculator

How UK take-home pay actually gets worked out

Three separate systems act on a UK payslip, and each one uses a different definition of your income. Income tax applies to taxable income — what remains after the Personal Allowance and any pension contributions that qualify for relief. Employee National Insurance ignores all of that and takes a slice of gross pay, assessed per pay period. Student loan repayments ignore both and charge a flat percentage of gross income above a threshold set by your repayment plan. Because the three bases never quite line up, intuitions built on one system routinely fail on the others: a pension contribution that saves 40p per £1 in tax saves nothing in NI under most schemes, and no amount of tax planning changes a student loan deduction.

PAYE hides this machinery. Your employer deducts everything before pay lands, so most people only confront the mechanics when something changes — a new job, a pay rise that crosses a band boundary, a pension decision, or a move to Scotland. Those are exactly the moments this calculator is built for.

A worked example: £58,000 with a pension and a Plan 2 loan

Amelia accepts a £58,000 role in Manchester. She contributes 5% of salary (£2,900) to her workplace pension and, having started university in 2014, repays a Plan 2 student loan. Her 2026-27 payslip builds up like this:

• Personal Allowance: her income is below £100,000, so she keeps the full £12,570 tax-free.
• Income tax: taxable income is £58,000 − £2,900 pension − £12,570 allowance = £42,530. The first £37,700 is taxed at 20% (£7,540); the remaining £4,830 falls in the higher-rate band at 40% (£1,932). Total: £9,472.
• National Insurance: charged on her full gross salary — the pension makes no difference here. 8% of the band between £12,570 and £50,270 is £3,016, plus 2% on the £7,730 above, giving £3,171.
• Student loan: 9% of everything over the Plan 2 threshold of £29,385 — again on gross pay — comes to £2,575.

Net result: £39,882 a year, about £3,324 a month, an overall deduction rate of 26.2%. Two readings of those numbers matter more than the numbers themselves. First, the pension: without it her take-home would be £41,622, so the £2,900 going into her pension only costs her £1,740 in spendable income — the higher-rate band is doing 40% of the saving for her. Second, her true marginal rate: each additional £1 she earns loses 40p to tax, 2p to NI, and 9p to her loan. She keeps 49p of every extra pound, which changes how she should think about overtime, bonuses, and salary negotiations.

Why the bands trip people up

UK income tax is marginal: crossing into the 40% band does not re-tax anything below it, so there is no cliff at £50,270 — only the slice above it is taxed at the higher rate. The genuine cliff sits at £100,000, where the Personal Allowance starts tapering away at £1 for every £2 of extra income.

The 62% zone in practice: a pay rise from £100,000 to £110,000 adds only about £3,800 to annual take-home, because each extra £1 is taxed at 40% while also withdrawing 50p of tax-free allowance (an effective 60% before NI). This is why pension contributions are unusually powerful in this band — money sacrificed here gets roughly 60% relief, and bringing adjusted net income back under £100,000 restores the allowance entirely.

The other quiet force is threshold freezing. The £12,570 allowance and the £50,270 higher-rate boundary have been frozen since April 2021, so ordinary pay growth pushes more of each salary into higher bands every year without any rate rising — fiscal drag. National Insurance runs in the opposite direction to income tax: its rate fallsfrom 8% to 2% above £50,270, which is why combined marginal rates in the table don’t simply climb.

Practical notes

• Check your tax code. 1257L means the standard allowance is applied. Job changes, company benefits, or untaxed income often produce a different code, and an incorrect one quietly over- or under-deducts until HMRC corrects it. The code is on every payslip.
• Pension route matters. This calculator models tax relief on contributions. Under salary sacrifice, your contractual pay is reduced before both tax and NI, adding an 8% (or 2%) NI saving on top — worth asking your employer about.
• Married couples: if one partner earns under the allowance, Marriage Allowance lets them transfer £1,260 of it to a basic-rate partner.
• Child Benefit:from April 2024 the High Income Child Benefit Charge starts at £60,000 of adjusted net income and removes the benefit entirely by £80,000 — another zone where pension contributions can restore a benefit the headline bands don’t show.
• Scotland: only income tax is devolved. If you move across the border, your income-tax bands change but NI and student loan deductions do not.

Terms people mix up

• Marginal vs effective rate.Amelia’s marginal rate is 51% (tax + NI + loan on her next pound); her effective rate is 26.2% (deductions as a share of the whole salary). Negotiations and overtime decisions hinge on the first; budgeting hinges on the second.
• Gross vs adjusted net income. The £100,000 taper and the Child Benefit charge test adjusted net income — gross income minus pension contributions and Gift Aid — not your headline salary. That gap is precisely what makes pension planning around those thresholds work.
• Tax code vs tax band. The code (1257L) tells your employer how much allowance to apply; the bands decide the rates above it. A wrong code changes your deductions even though the bands never moved.
• Loan repayment vs loan balance. Student loan deductions are income-contingent: they depend only on earnings above the threshold, not on how much you owe. Two graduates with identical salaries repay identical amounts even if one owes triple the other.

When this calculator earns its keep

Reach for it when a number is about to change: comparing job offers whose pension terms differ, deciding a contribution percentage near £50,270 or £100,000, sanity-checking your first payslip after a new tax code, or pricing a move between Scotland and the rest of the UK. For a full reference of this year’s bands and thresholds, the UK tax rates guide pairs well with the tables of ready-made results at UK take-home by salary.