How UK salary tax works
Take-home pay starts from gross salary and steps down through Income Tax, employee
National Insurance, pension contributions, and any student loan repayments. Because each
deduction has different thresholds, the gap between gross and net pay shifts as earnings
rise.
That is why a rule-of-thumb percentage is usually wrong. The value of a salary calculator
is that it shows the exact slices of pay being taxed instead of treating the whole salary
as one flat rate.
Income Tax
England, Wales and Northern Ireland use a three-band system above the standard Personal
Allowance. Scotland uses separate rates and thresholds, which is why the region toggle
matters on this page.
At higher incomes, the Personal Allowance tapers away once adjusted net income passes
£100,000, increasing the effective tax drag in that range.
National Insurance
Employee Class 1 National Insurance is separate from Income Tax. For
2026/27, employees pay
8%
between the Primary Threshold and the Upper Earnings Limit, then 2% above that.
NI is charged through payroll and can move differently from Income Tax if pension salary
sacrifice is being used.
Pension contributions
Pension contributions reduce take-home pay directly. If your employer uses salary
sacrifice, they can also reduce the earnings used for Income Tax, employee NI, and
student loan deductions.
Employer contributions are shown separately as pension funding because they increase what
goes into the pension without being deducted from your pay.
Student loan
Student loan repayments are only charged above a plan-specific threshold. Postgraduate
loans can stack with an undergraduate plan, which is why the marginal rate can jump once
you are above both thresholds.
That makes salary comparisons more nuanced than gross pay alone suggests, especially for
graduates near a threshold.