How is UK income tax calculated?

Income Tax uses banded rates applied only to earnings above each threshold. For 2024-25 in England, Wales, and Northern Ireland: the Personal Allowance of £12,570 is tax-free, the Basic Rate of 20% applies between £12,571 and £50,270, the Higher Rate of 40% applies up to £125,140, and the Additional Rate of 45% applies above that. Scottish residents use different bands set by the Scottish Parliament.

What is National Insurance?

National Insurance is a separate payroll deduction from Income Tax, used to fund state pension and certain benefits. For employees in 2025/26, Class 1 contributions are typically 8% on weekly earnings between the Primary Threshold and Upper Earnings Limit, and 2% on earnings above the Upper Earnings Limit. Employer contributions are additional and do not reduce your take-home pay directly.

Does pension reduce my tax?

Yes. Employee pension contributions made via salary sacrifice or deducted before tax reduce the gross income figure that both Income Tax and National Insurance are calculated on. This means you pay less tax and NI than you would on the same salary with no pension contribution, effectively giving your pension contributions a boost beyond the face value of the amount deducted.

What if I earn over £100,000?

Your Personal Allowance is gradually withdrawn once income exceeds £100,000. For every £2 of income above that threshold, £1 of Personal Allowance is lost, creating an effective marginal tax rate of around 60% on income between £100,000 and £125,140 where the allowance disappears entirely. Pension contributions that bring adjusted net income below £100,000 can restore some or all of the allowance.

UK Take-Home Pay Calculator (2025/26)

See net salary after Income Tax, National Insurance, pension, and student loan, with a clear breakdown of where every pound goes.

How this tool works

The UK take-home pay calculator applies current-year HMRC Income Tax bands and National Insurance rates to compute net monthly and weekly pay from a gross annual salary. Income Tax is computed on salary after subtracting pension contributions, using standard tax code 1257L: personal allowance (currently 12,570 GBP) is untaxed, the basic rate (20%) applies up to the higher-rate threshold (50,270 GBP), the higher rate (40%) applies up to 125,140 GBP, and the additional rate (45%) applies above that. Class 1 National Insurance applies at 8% between the primary threshold and the upper earnings limit, and 2% above. Student loan repayments add above their respective thresholds: Plan 1 at 9%, Plan 2 at 9%, Plan 4 (Scotland) at 9%. Key assumption: the tool uses the standard personal allowance of 12,570 GBP and does not model emergency tax codes, underpayment adjustments, or employer-specific arrangements. Edge case: the personal allowance tapers by 1 GBP for every 2 GBP of income above 100,000 GBP and is fully withdrawn at 125,140 GBP, creating a 60% effective marginal tax rate in this band where the standard higher-rate (40%) band rate plus the taper effect combine. The tool applies the tapered allowance for salaries in this range rather than using the nominal band rates.

Rates are aligned to HMRC / gov.uk publications for 2025/26, verify before filing; this tool is illustrative, not payroll advice.

Worked example

On £35,000 gross in England with no student loan and 5% employee pension, pension comes out first, then Income Tax and NI on what remains, you should see roughly £27k–£29k net annually depending on rounding. Toggle Scottish taxpayer or Plan 2 to see how band or repayment changes shift the donut.

Frequently asked questions

How is UK income tax calculated?
Income Tax uses banded rates applied only to earnings above each threshold. For 2024-25 in England, Wales, and Northern Ireland: the Personal Allowance of £12,570 is tax-free, the Basic Rate of 20% applies between £12,571 and £50,270, the Higher Rate of 40% applies up to £125,140, and the Additional Rate of 45% applies above that. Scottish residents use different bands set by the Scottish Parliament.
What is National Insurance?
National Insurance is a separate payroll deduction from Income Tax, used to fund state pension and certain benefits. For employees in 2025/26, Class 1 contributions are typically 8% on weekly earnings between the Primary Threshold and Upper Earnings Limit, and 2% on earnings above the Upper Earnings Limit. Employer contributions are additional and do not reduce your take-home pay directly.
Does pension reduce my tax?
Yes. Employee pension contributions made via salary sacrifice or deducted before tax reduce the gross income figure that both Income Tax and National Insurance are calculated on. This means you pay less tax and NI than you would on the same salary with no pension contribution, effectively giving your pension contributions a boost beyond the face value of the amount deducted.
What if I earn over £100,000?
Your Personal Allowance is gradually withdrawn once income exceeds £100,000. For every £2 of income above that threshold, £1 of Personal Allowance is lost, creating an effective marginal tax rate of around 60% on income between £100,000 and £125,140 where the allowance disappears entirely. Pension contributions that bring adjusted net income below £100,000 can restore some or all of the allowance.