How UK take-home pay is calculated (2026/27)

Most employees are paid through PAYE (Pay As You Earn). Your employer estimates tax and National Insurance each pay period and sends that money to HMRC. At the end of the tax year, HMRC compares what was deducted with what was actually due and may collect a little more or refund a little less.

For a simple employed salary with no pension and no student loan, the mental model is: take-home = gross − Income Tax − employee National Insurance. Employer National Insurance is a cost to the business, not a deduction from your net pay. Self-employed people use a different timetable (Self Assessment) and different NI classes, but the idea is the same: taxable income after allowances, then tax, then NI on profits or earnings.

The UK tax year runs from 6 April to 5 April. This article uses commonly published 2026/27 structures: a Personal Allowance of £12,570, a 20% basic rate on the next £37,700 of taxable income for England, Wales and Northern Ireland, and employee Class 1 NI at 8% between the primary threshold and the upper earnings limit, then 2% above that.

If you have a full Personal Allowance, the first £12,570 of income in the year is not charged Income Tax. That is why a salary just above £12,570 is not taxed from the first pound. People with more than one job, or with a tax code that is not the usual 1257L, may have a different allowance — that is one reason two colleagues on the same headline salary can take home different amounts.

The allowance is not unlimited. Once adjusted net income goes above £100,000, the Personal Allowance is reduced by £1 for every £2 of extra income until it disappears (around £125,140). That withdrawal sits on top of higher-rate tax, which is why the effective tax rate on that slice of income feels unusually steep.

People often say “I’m a 20% taxpayer” or “I’m a 40% taxpayer”. That describes the highest slice you reach, not a single rate on every pound. For England, Wales and Northern Ireland in this 2026/27-style model, taxable income (gross minus your Personal Allowance, ignoring other reliefs) is charged at 20% up to £37,700 of taxable income, then 40% up to the additional-rate threshold, then 45%.

If you earn £30,000 and have a full £12,570 allowance, taxable income is £17,430. All of that sits in the 20% band, so Income Tax is £3,486. You do not pay 20% of the whole £30,000.

Scotland sets its own Income Tax rates and bands on non-savings, non-dividend income. National Insurance is still UK-wide. If you live in Scotland, use the Scotland option on the calculator rather than the rUK example below.

Employee Class 1 National Insurance is calculated on earnings, not on “taxable income after the Personal Allowance” in the Income Tax sense — but in recent years the main threshold has sat at the same £12,570 figure, which makes the two easy to mix up. In our simplified model, employees pay 8% on earnings between £12,570 and £50,270, and 2% above £50,270.

On £30,000, employee NI is 8% of (£30,000 − £12,570) = £1,394.40. On £45,000 it is 8% of £32,430 = £2,594.40. Employer NI is extra and does not come out of your net pay; if you are comparing the true cost of hiring, use the National Insurance calculator in employer mode.

Student loan deductions depend on plan type and a separate income threshold. They are not Income Tax. Estimate them on our student loan calculator and subtract from take-home if you have a loan.

Workplace pensions reduce take-home in two common ways. Relief at source takes a contribution after tax and then adds basic-rate relief in the pension pot. Salary sacrifice reduces the salary that tax and NI are calculated on. Our take-home tool’s pension box is a simple percentage-of-gross reduction, not a full HMRC engine. Use the salary sacrifice calculator, and the written guide on how sacrifice compares with relief at source, if you are choosing between those two routes.

Tax codes, taxable benefits (company car, medical cover), Marriage Allowance, Scottish rates, and directors’ NI can all move the result. If your payslip disagrees with a web calculator, trust the payslip and the HMRC Personal Tax Account.