Take Home Pay Calculator UK (2026/27)

Personal Allowance

You can use this allowance for your salary, savings interests, dividends and other income.

For the 2026/2027 tax year, the Personal Allowance is set at £12,570. If you earn less than this amount, you typically won't owe any Income Tax.

This allowance can change in a few situations. It might be more if you qualify for benefits like Marriage Allowance or Blind Person's Allowance. But it can also be less if you're a high earner or if you have unpaid taxes from a previous year. You can find your personal allowance using your tax code or check your personal allowance on GOV.UK.

If your income exceeds £100,000, there's a different rule. For every £2 you earn above this threshold, £1 is subtracted from your £12,570 allowance. So, if you earn £125,140 or more, you'll have to pay Income Tax on your entire income, and there won't be any tax-free Personal Allowance.

For England, Wales and Northern Ireland

Assuming your tax code is 1257L.

View tax bands on GOV.UK →

If you have a different tax code, you can use the table above to work out your tax band after removing your personal allowance from your taxable income.

Popular UK Salaries: Take Home Pay Breakdown (2026/27)

Quickly look up what standard UK salaries take home each month and year after Income Tax and employee National Insurance (8% and 2%). Figures are calculated using standard tax code 1257L for England, Wales, and Northern Ireland with no student loan or pension deductions.

HMRC Tax Code Decoder (2026/27)

Your tax code appears on your payslip, P45, and P60 to tell your employer or pension provider how much tax-free income you are entitled to before deductions begin. If HM Revenue & Customs has assigned you an incorrect code, you may find yourself overpaying through emergency tax or facing an unexpected bill at year-end. You can check or update your current code at any time via your official HMRC Personal Tax Account on GOV.UK.

For an exhaustive list of special alphanumeric prefixes and suffix letters, review the statutory guide to Understanding your tax code on GOV.UK.

National Insurance (NI) Category Letters Explained

Your payslip lists a National Insurance category letter next to your NI number. This statutory letter informs payroll software how much you and your employer must contribute towards the National Health Service (NHS), State Pension credits, and statutory sick or maternity benefits. For more information on historical contribution records and state pension forecast qualification, check your record on GOV.UK's National Insurance Portal.

See all official Class 1 contribution categories and employer primary thresholds at GOV.UK: National Insurance rates and categories.

UK Income Tax Bands & Rates (2026/27)

Income tax is charged on taxable earnings above your £12,570 Personal Allowance. Earnings are assessed incrementally through marginal tax bands. If your adjusted net income exceeds £100,000, your Personal Allowance reduces by £1 for every £2 of income above £100,000, creating an effective 60% marginal tax trap between £100,000 and £125,140. Scottish taxpayers have devolved income tax powers set by the Scottish Parliament, detailed on the Scottish Government Tax Portal.

Official statutory thresholds and rates can be verified directly at GOV.UK: Income Tax rates and Personal Allowances.

UK Student Loan Repayment Plans (2026/27)

Student loan deductions in the UK operate as an income-contingent graduate contribution rather than a commercial debt. Repayments are collected automatically by HMRC through PAYE alongside income tax and National Insurance once your earnings exceed the repayment threshold for your plan. Unlike commercial loans, if your salary drops below the threshold, your repayments automatically pause.

Key Rules for Student Loan Deductions

• Concurrent Undergraduate & Postgraduate Repayments: If you hold both an undergraduate loan (e.g. Plan 2 at 9%) and a postgraduate loan (6%), both repayments are deducted simultaneously if you earn over £27,295, resulting in a total graduate deduction rate of 15% on income above that threshold.
• Salary Sacrifice Impact: Contributing to an employer pension via salary sacrifice reduces your gross pay before student loan calculations are applied, which in turn reduces your monthly student loan deduction.

See official guidance and write-off rules at GOV.UK: Repaying your student loan.

Student to Full-Time Work: Essential Transition Checklist

Starting your first career job or graduating this year? Avoid the 4 most common payroll pitfalls that cost UK graduates hundreds in their first year:

• 1. Emergency Tax Trap: Check for codes 1257 W1, M1, or BR. Submit your Starter Checklist to restore 1257L and reclaim overpaid tax.
• 2. April Repayment Rule: By law, student loan deductions only start the April after graduation. Claim immediate refunds if deducted early.
• 3. Under-22 Pension Opt-In: Workers aged 18–21 aren't auto-enrolled. Opt in manually to claim your non-negotiable 3% employer match.
• 4. Mid-Year Tax Refunds: Started work in autumn or did a summer job? You have unused personal allowances and are likely due a refund.

Read Full Student to Work Tax Guide & Checklist →

UK Workplace Pension Schemes & Tax Relief Explained

Under UK automatic enrolment legislation, eligible employees are enrolled into a workplace pension where minimum statutory contributions total 8% of qualifying earnings (typically 5% paid by the employee and 3% paid by the employer). However, the tax mechanism through which your pension contributions are processed significantly changes how much money lands in your bank account each month.

Why Salary Sacrifice Is the Most Tax-Efficient

Under a Salary Sacrifice arrangement, you exchange a portion of your contractual cash earnings for non-cash pension contributions. Because your gross reference earnings decrease, both your taxable income and National Insurance threshold earnings decline. This delivers three distinct financial advantages:

• NI Savings: You save up to 8% in National Insurance on earnings up to £50,270, and 2% above that. In many cases, employers also pass back their own 13.8% employer NI savings into your pension pot.
• Avoiding the 60% Tax Trap: If your adjusted net income sits between £100,000 and £125,140, sacrificing salary into your pension restores your £12,570 Personal Allowance, giving an effective 60% tax relief on the contribution.
• Child Benefit Protection: Sacrificing salary lowers your adjusted net income for the High Income Child Benefit Charge (HICBC) threshold.

Learn more about annual contribution allowances and statutory tax limits at GOV.UK: Tax on your private pension contributions.

How Bonuses and Overtime Are Taxed in the UK

Receiving an annual bonus, commission, or overtime payment often results in unexpected payslip shock. Many UK workers notice that a significantly higher percentage of their bonus is deducted for tax than their regular monthly salary. This happens because of the mechanics of HMRC's PAYE (Pay As You Earn) cumulative tax tables.

Why Bonuses Trigger Higher Income Tax

When payroll software runs in a bonus month, HMRC's formula treats your pay for that month as though you will earn that higher amount for all 12 months of the tax year. If your combined monthly wage and bonus exceeds £4,189 (the monthly Higher Rate threshold), the system automatically taxes the slice above £4,189 at 40%, and anything above £10,428 at 45%.

The Good News: Because UK PAYE is cumulative across the financial year (April 6 to April 5), the system continuously reconciles your year-to-date earnings in subsequent months. If too much tax was withheld in your bonus month, your tax bill will be automatically reduced in subsequent payslips.

The National Insurance Advantage on Bonuses

Unlike Income Tax, employee National Insurance is calculated per pay period (weekly or monthly) and is never cumulative. This rule actually works in favor of employees receiving a lump-sum bonus:

• Standard monthly earnings between £1,048 and £4,189 attract 8% employee NI.
• Any earnings in that specific calendar month above £4,189 attract only 2% employee NI!
• Receiving your bonus in a single lump sum means a larger portion falls above the £4,189 threshold, saving you 6% in National Insurance compared to spreading the bonus across 12 equal monthly payments.

Review statutory guidance on employer bonus declarations and national insurance rules on GOV.UK: Tax on bonuses and incentives.

Salary Sacrifice Explained (SMART Pensions & Benefits)

Under a Salary Sacrifice (or SMART) arrangement, you contractually agree to reduce your contractual cash salary in exchange for your employer providing non-cash benefits — most commonly pension contributions, ultra-low emission company cars, or cycle-to-work equipment.

Because your official gross salary is reduced before any statutory deductions are computed, both your Income Tax and your National Insurance (NI) contributions are calculated on the lower figure. This results in significant tax savings compared to making contributions from your net pay.

Key Advantages of Salary Sacrifice

• Immediate Payslip Tax Relief: Unlike personal SIPPs where higher rate relief must be reclaimed on a Self Assessment tax return, salary sacrifice applies full relief instantly on every payslip.
• Employer NI Pass-Back: Employers also save 13.8% in Secondary Class 1 NI contributions on sacrificed pay. Many progressive employers pass some or all of these savings back into your pension pot.
• Child Benefit & Student Loan Reductions: Reducing contractual gross salary directly lowers your Adjusted Net Income for the High Income Child Benefit Charge (£60k - £80k) and lowers student loan repayment deductions.
• National Minimum Wage Protection: By law, salary sacrifice cannot reduce your cash earnings below the National Living Wage / National Minimum Wage.

Read statutory rules and employer guidelines at GOV.UK: Salary sacrifice and the effects on PAYE.

Taxable Benefits in Kind (BiK, P11D & Company Cars)

If your employer provides non-cash employment benefits — such as private health insurance, a company car, gym memberships, or interest-free loans — HMRC treats them as Benefits in Kind (BiK). While these perks improve your overall remuneration, they increase your taxable earnings and can alter your tax code.

P11D Forms vs Payrolling of Benefits

Employers report these benefits to HMRC either through an annual P11D form submitted after the tax year ends (which prompts HMRC to adjust your next year's tax code) or via Payrolling Benefits (where tax is deducted in real-time each month through regular payroll). You can inspect all reported benefits in your online Personal Tax Account on GOV.UK.

Other Income: Second Jobs, Freelancing & Side Hustles

Many UK workers earn income from multiple sources alongside their primary salary, such as a second part-time job, freelance consulting, rental property, or online selling. Here is how HMRC coordinates tax across multiple incomes:

• Second PAYE Employment: Your primary job receives your standard 1257L tax code (£12,570 tax-free). Your second job will usually be assigned tax code BR (Basic Rate 20%) or D0 (Higher Rate 40%), meaning all income from that job is taxed from the very first pound. Importantly, you receive a fresh National Insurance primary threshold (£1,048/month) for each separate employer.
• The £1,000 Trading Allowance: If you earn up to £1,000 gross per tax year from casual freelancing, tutoring, gardening, or side businesses, it is completely tax-free and does not need to be reported to HMRC.
• The £1,000 Property Allowance: Similar to the trading allowance, you can earn up to £1,000 tax-free each year from renting out land, parking spaces, or property.
• Self Assessment Reporting: If your side hustle, self-employment, or trading turnover exceeds £1,000 in a tax year, you must register for Self Assessment with HMRC by 5 October following the end of the tax year and file your return by 31 January.

For full details on declaring supplementary earnings, visit GOV.UK: Tax-free allowances on property and trading income.

Savings Interest & the Personal Savings Allowance (PSA)

With higher interest rates on savings accounts and fixed deposits, many UK earners are now crossing the statutory threshold where savings interest becomes taxable. Under HMRC regulations, how much tax-free interest you can earn each year depends directly on your overall income tax bracket.

How HMRC Automatically Collects Tax on Savings Interest

UK banks and building societies do not deduct tax from your savings interest at source; they pay gross interest and report your total annual earnings directly to HMRC at the end of every tax year.

• Automatic PAYE Tax Code Adjustment: If you are employed under PAYE and your savings interest exceeds your Personal Savings Allowance, HMRC will usually adjust your tax code for the following tax year (e.g. lowering it from 1257L to collect the tax evenly across your monthly pay packets).
• Starting Rate for Savings: If your other income (such as wages or pension) is under £17,570, you may qualify for up to an additional £5,000 of interest at the 0% Starting Rate for Savings.
• Cash ISAs: Interest earned in a Cash ISA or Stocks & Shares ISA remains 100% tax-free forever and does not use up any of your £1,000 or £500 Personal Savings Allowance.

Check your personal eligibility and statutory allowances on GOV.UK: Tax on savings interest and allowances.

High Income Child Benefit Charge (HICBC) & Salary Sacrifice

Child Benefit provides financial support to families with children under 16 (or under 20 in approved full-time education). However, if either parent or partner earns an "adjusted net income" above the statutory threshold, the High Income Child Benefit Charge (HICBC) claws back a portion or all of that benefit through the tax system.

How to Legally Keep Your Full Child Benefit

Because HICBC is based on Adjusted Net Income (your gross income minus gross pension contributions and Gift Aid donations), employees earning between £60,000 and £80,000 can protect their entitlement:

• Pension Salary Sacrifice: Making additional workplace pension contributions reduces your taxable adjusted net income back to or below £60,000. For example, an employee earning £65,000 who sacrifices £5,000 into their pension saves 40% income tax, 2% employee NI, AND retains 100% of their Child Benefit (worth over £2,250 for two children).
• Avoiding Self Assessment Penalties: If you earn over £60,000 and do not sacrifice salary, you must register for Self Assessment with HMRC to pay the charge by 31 January following the end of the tax year.

Review official clawback calculators and registration requirements on GOV.UK: High Income Child Benefit Charge.

Gift Aid Tax Relief for Higher and Additional Rate Taxpayers

When you donate to a UK charity or Community Amateur Sports Club (CASC) and declare Gift Aid, the charity claims an extra 25p for every £1 you give directly from the UK government. However, if you pay tax at 40% or 45%, you are personally entitled to substantial additional tax relief.

How to Reclaim Your Gift Aid Tax

HMRC does not automatically return your personal tax relief; you must actively claim it using one of two simple methods:

• Self Assessment Tax Return: Include the total gross amount of your Gift Aid donations in box 1 of the Tax Reliefs section of your tax return.
• PAYE Tax Code Adjustment: If you do not file Self Assessment, you can contact HMRC directly with your donation receipts. HMRC will increase your tax code (e.g. from 1257L to a higher number), lowering your monthly PAYE tax deduction on your regular payslips.

Official donation rules and claim forms are available at GOV.UK: Tax relief when donating to charity.

UK Dividend Tax Rates & the £500 Dividend Allowance

If you receive dividend payments from company shares, unit trusts, or an owner-managed limited company alongside your PAYE salary, those dividends are taxed under separate HMRC dividend tax rates.

Key Rules for Dividend Taxation

• No National Insurance: Unlike employment salary, dividends are not subject to Class 1 employee or employer National Insurance contributions.
• Stocks & Shares ISAs: Any dividends earned on shares or investment funds held inside an ISA wrapper are 100% tax-free and do not count toward your £500 statutory allowance.
• Tax Stacking Order: When calculating your overall tax, HMRC stacks your income in a strict order: employment salary is taxed first, followed by savings interest, and dividend income is taxed last at the top of your stack.

Check current allowances and payment rules on GOV.UK: Tax on dividends.

Frequently Asked Questions for UK Take Home Pay

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