Guide · Take-home pay

How take-home pay is calculated in the UK

A step-by-step guide to how income tax, National Insurance, pension and student loan deductions turn your gross salary into take-home pay. Start by add together salary, bonus and overtime for the tax year. This is the figure before any deductions.

By Uthman ChoudhuryPublished 20 September 2026Updated 20 September 2026

Skip the reading: use the Take-Home Pay Calculator for your own numbers.

How do you work out your take-home pay?

Start with gross pay. Add together salary, bonus and overtime for the tax year. This is the figure before any deductions.
Take off salary sacrifice and net-pay pension. Salary sacrifice reduces pay for both tax and National Insurance. Net-pay pension contributions reduce pay for tax only.
Apply the personal allowance. Subtract the tax-free allowance (£12,570 for most people, tapered above £100,000) to get taxable income.
Charge income tax by band. Tax each slice of taxable income at its band rate: 20%, 40% and 45%, or the six Scottish rates.
Work out National Insurance. Employee NI is 8% on pay between £12,570 and £50,270 and 2% above, worked out on pay after salary sacrifice only.
Deduct student loan repayments. Take 9% of pay above your plan threshold (6% for a Postgraduate Loan).
Subtract everything from gross pay. Gross pay minus pension, tax, NI and loans is your take-home pay. Divide by 12 for monthly or 52 for weekly.

What is taken out of your pay?

Four deductions can come off a UK payslip: pension contributions, income tax, National Insurance and student loan repayments. Your employer calculates all of them through PAYE (Pay As You Earn) using your tax code and the rate tables for the year. Each is worked out on a slightly different figure, which is where most confusion starts.

England, Wales and Northern Ireland income tax bands 2026/27 (with standard personal allowance)
Band	Income range	Rate
Personal allowance	Up to £12,570	0%
Basic rate	£12,571 to £50,270	20%
Higher rate	£50,271 to £137,710	40%
Additional rate	£137,711 and above	45%

Class 1 National Insurance 2026/27
Who pays	Earnings	Rate
Employee	Up to £12,570 a year	0%
Employee	£12,571 to £50,270	8%
Employee	Above £50,270	2%
Employer	Above £5,000	15%

Worked example: £42,000 with a 5% pension and a Plan 2 loan

Gross pay is £42,000. The 5% net-pay pension takes £2,100, leaving £39,900 taxable.
Subtract the £12,570 personal allowance: £27,330 is taxed. All of it is in the basic rate band, so income tax is £5,466.
NI ignores the pension: 8% of £29,430 is £2,354.
Plan 2 takes 9% of pay above £29,385: £1,128 a year.
Take-home pay is £30,952 a year, £2,579 a month. The effective rate is 21.3% and the marginal rate 39%.

Try it yourself in the take-home pay calculator.

What are the most common mistakes?

Confusing marginal and effective rates. Being a higher rate taxpayer does not mean you pay 40% on everything, only on the slice above £50,270.
Treating all pensions the same. Relief at source contributions do not reduce your taxable pay on the payslip; net pay and salary sacrifice do.
Reading the first payslip of a new job as normal. Emergency codes and mid-month starts distort it. Judge from the second or third payslip.
Forgetting the tax year runs April to April. Annual figures on this site are for the tax year, not the calendar year.

Frequently asked questions

Why is tax on my payslip different every month?

PAYE is cumulative: each month HMRC looks at your total pay and allowance so far in the year. Overtime, a bonus or a change of tax code in one month shifts that month's deduction, and it evens out over later months.

Are bonuses taxed differently?

No. A bonus is added to your pay for the year and taxed at your marginal rate. It looks heavily taxed because the whole bonus lands in one pay period, but over the year the total tax is the same as if it had been spread out.

Is National Insurance calculated on the same figure as income tax?

Not always. NI is worked out on pay after salary sacrifice but before net-pay pension contributions and without any personal allowance; it has its own thresholds. That is why a net-pay pension reduces your tax but not your NI.