How UK take-home pay is calculated
- Pension contributions come off first if you use salary sacrifice (before tax and NI) or a net pay arrangement (before tax only).
- Personal allowance. With tax code 1257L the first £12,570 is tax-free. Above £100,000 the allowance falls by £1 for every £2 of income and disappears at £125,140.
- Income tax on the rest. In England, Wales and Northern Ireland: 20% on the next £37,700, 40% up to £125,140 and 45% above. In Scotland there are six bands from 19% to 48%.
- National Insurance: 8% of pay between £12,570 and £50,270, and 2% above that. It is worked out on each pay period separately, but for regular pay the annual figure is the same.
- Student loan: 9% of pay above your plan’s threshold, plus 6% above £21,000 for a postgraduate loan.
- What remains is take-home pay. The table divides it by 12 and 52.
Your employer also pays 15% NI on your earnings above £5,000. It never appears on your payslip as a deduction, but it is shown here so you can see what you cost to employ.
Worked example: £35,000 in England
£35,000 a year, 1257L, no pension or student loan, 2026/27
Taxable income is £35,000 − £12,570 = £22,430, all at 20%: £4,486.00. National Insurance is 8% of the same £22,430: £1,794.40. Take-home pay is £28,719.60 a year, or £2,393.30 a month.
Take-home pay£28,719.60a year
- Take-home per year
- £28,720
- Take-home per month
- £2,393
- Income tax per year
- £4,486
| Item | Year | Month | Week |
|---|---|---|---|
| Gross pay | £35,000.00 | £2,916.67 | £673.08 |
| Income tax | −£4,486.00 | −£373.83 | −£86.27 |
| National Insurance | −£1,794.40 | −£149.53 | −£34.51 |
| Take-home pay | £28,719.60 | £2,393.30 | £552.30 |
The same salary in Scotland leaves £28,704.53 because the 21% intermediate rate starts at £29,527. Add a Plan 2 student loan and the repayment is £505 a year.
What changed for 2026/27
- England, Wales and Northern Ireland: no change to the personal allowance or bands, which are frozen until April 2031.
- Scotland: the starter band now runs to £16,537 and the basic band to £29,526, so most Scottish taxpayers pay slightly less than in 2025/26.
- Student loans: thresholds rose to £26,900 (Plan 1), £29,385 (Plan 2) and £33,795 (Plan 4). Plan 5 stays at £25,000.
- National Insurance: rates and thresholds unchanged; the lower earnings limit rose to £6,708 a year.
- Dividends: the basic and higher dividend rates went up to 10.75% and 35.75% (see the dividend tax calculator).
Ways to keep more of your pay
- Check your tax code in your HMRC online account or app. A wrong code is the most common reason for overpaying.
- Use salary sacrifice for pension contributions if your employer offers it: you save NI as well as tax, and some employers add their NI saving to your pension.
- Watch the £100,000 line. Between £100,000 and £125,140 the effective rate on extra income is 60% plus NI. A pension contribution that brings adjusted net income back to £100,000 restores the allowance — and may also protect tax-free childcare.
- Claim allowances you are entitled to — marriage allowance, uniform and professional fees, working from home where required — through your tax code.