How Your UK Take-Home Pay Is Calculated

Your take-home pay (net pay) is your gross salary minus all mandatory deductions. For the 2026/27 tax year (6 April 2026 to 5 April 2027), these deductions include Income Tax, National Insurance, pension contributions, and any applicable student loan repayments.

Income Tax

UK Income Tax uses a progressive band system. You only pay tax on income above the Personal Allowance of £12,570:

• Personal Allowance: £0–£12,570 — 0% (tax-free)
• Basic Rate: £12,571–£50,270 — 20%
• Higher Rate: £50,271–£125,140 — 40%
• Additional Rate: Over £125,140 — 45%

If you earn over £100,000, your Personal Allowance is reduced by £1 for every £2 above that threshold, creating an effective 60% marginal rate between £100,000 and £125,140. Learn about the 60% tax trap →

National Insurance Contributions

Employee National Insurance for 2026/27:

• 8% on earnings between £12,570 and £50,270
• 2% on earnings above £50,270

Employers also pay 15% NI on earnings above £5,000. Employer NI changes for 2026/27 →

Pension Deductions

Pension contributions reduce your taxable income. Salary sacrifice is deducted before tax and NI are calculated, saving you both. Relief at source is deducted after NI, with basic-rate tax relief added automatically by your provider. Compare pension methods →

Student Loan Repayments

Repayments are deducted at 9% of income above your plan threshold:

• Plan 1: 9% above £26,900
• Plan 2: 9% above £29,385
• Plan 4: 9% above £33,795
• Plan 5: 9% above £25,000
• Postgraduate: 6% above £21,000

Full student loan repayment guide →

Scottish Tax Rates

Scottish taxpayers pay six income tax bands from 19% (Starter) to 48% (Top Rate), with different thresholds to the rest of the UK. Scottish rates generally result in slightly higher tax for earners above £28,000. Compare Scottish vs English tax →

Ways to Increase Your Take-Home Pay

• Increase pension contributions via salary sacrifice to save tax and NI
• Check your tax code is correct — errors are common after job changes
• Claim Marriage Allowance if eligible (saves up to £252/year)
• Use salary sacrifice schemes (cycle to work, electric car, childcare)

Full guide to increasing your take-home pay →