How take-home pay works
How tax, National Insurance, pension and student loan come off your gross salary to leave what lands in your account.
Take-home pay is what actually lands in your account after the deductions come off your salary. The headline figure in your contract is your gross pay. From that, you lose income tax, National Insurance, any workplace pension contribution and any student loan repayment. Gross pay minus those four things is your take-home pay, sometimes called net pay.
The short version
- Take-home pay is your gross salary minus income tax, National Insurance, pension and any student loan.
- The first £12,570 you earn is tax-free (the personal allowance). Income tax then runs at 20%, 40% and 45% on the slices above it.
- National Insurance is 8% on earnings between £12,570 and £50,270, then 2% above that, charged on your full salary.
- A workplace pension lowers your income tax but not your National Insurance. A student loan comes off on top if you earn over the plan threshold.
- These are 2026/27 figures for England, Wales and Northern Ireland, and every result here is an estimate to plan with, not financial advice.
The numbers at a glance
Two sets of thresholds do most of the work: the income tax bands and the National Insurance thresholds. Both are for the 2026/27 tax year and apply to the rest of the UK, meaning England, Wales and Northern Ireland. Scotland sets its own income tax bands, covered further down.
Income tax, on income above the £12,570 personal allowance:
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | First £12,570 | 0% |
| Basic rate | Up to £37,700 above the allowance | 20% |
| Higher rate | £37,700 to £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
National Insurance (Class 1, the type employees pay), on your full salary:
| Earnings | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 8% |
| Above £50,270 | 2% |
The personal allowance
The personal allowance is the slice of income you can earn each year before income tax starts. For 2026/27 it is £12,570. Earn less than that and you pay no income tax at all, though you may still pay National Insurance, which uses a separate threshold.
There is a catch for higher earners. Once your income passes £100,000, the allowance tapers away: you lose £1 of allowance for every £2 you earn over £100,000. By £125,140 it has gone entirely, so income from the first pound is taxed. This is why the band between £100,000 and £125,140 carries an effective tax rate of around 60%, often called the 60% tax trap: each extra pound is taxed at 40% and also strips away 50p of allowance, which then gets taxed too. It is also why paying into a pension can be worth more in that range, because it can pull your income back below the taper.
Income tax bands
Income tax is charged in slices, not all at one rate. Pay As You Earn (PAYE), the system that takes tax straight from your wages, applies the rate for each slice as your income rises. In England, Wales and Northern Ireland the 2026/27 bands work on your taxable income, which is your income above the personal allowance:
- Basic rate, 20%. The first £37,700 of taxable income. With the full allowance, that covers a salary up to about £50,270.
- Higher rate, 40%. Taxable income from £37,700 up to £125,140.
- Additional rate, 45%. Taxable income above £125,140.
Only the income inside each band is taxed at that band's rate. Moving into the higher rate does not mean your whole salary is suddenly taxed at 40%, only the part above the threshold.
National Insurance
National Insurance contributions (NICs) are a separate deduction that partly funds the state pension and some benefits. As an employee you pay Class 1 contributions, and the thresholds work differently from income tax.
You pay nothing on the first £12,570 (the primary threshold). You then pay 8% on earnings between £12,570 and £50,270 (the upper earnings limit, or UEL), and 2% on anything above £50,270. Crucially, National Insurance is charged on your full salary. A workplace pension contribution does not reduce it, and the personal allowance does not apply to it. So even a pension contribution that cuts your income tax leaves your National Insurance unchanged.
Pension contributions
A workplace pension contribution comes out of your pay before it reaches you. On the most common arrangement, called net pay, your contribution is taken from your gross salary before income tax is worked out. That lowers your taxable income, so you pay less income tax, and it can also pull your income back under the £100,000 taper if you are near it.
It does not lower your National Insurance, which is still charged on the full salary. The upshot is that a pension contribution costs you less in take-home pay than its headline size, because part of what goes in is tax you would otherwise have paid. To see how a contribution changes both your pension pot and your take-home, try the pension calculator, or compare it with giving up salary through the salary sacrifice calculator.
Student loan
If you have a student loan, repayments come straight off your pay once you earn over the threshold for your plan. The repayment is a percentage of the income above that threshold, worked out on your gross salary rather than after tax or pension. Which plan you are on depends on when and where you studied. The 2026/27 thresholds are:
| Plan | You repay over | Rate |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Only income above the threshold is counted, and only at the rate shown. If you hold both an undergraduate and a postgraduate loan, both deductions can apply at once. The student loan thresholds are reviewed and usually rise each April, so check yours for the current year.
Scotland is different
Scotland sets its own income tax bands, so a Scottish taxpayer on the same salary can take home a different amount. Instead of three rates, Scotland uses six: a 19% starter rate, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top rate, applied to different slices of income. The personal allowance and National Insurance are the same as the rest of the UK, because those are set UK-wide. Our take-home pay calculator covers both Scotland and the rest of the UK, so pick your region to get the right figure. The worked example below uses the rest of the UK bands.
A worked example
Take a £35,000 salary in 2026/27, paying 5% into a workplace pension, in England, Wales or Northern Ireland, with no student loan. Here is how it breaks down over a year:
- Pension, 5% of £35,000: £1,750 comes off first, leaving £33,250 of income for income tax.
- Income tax: after the £12,570 allowance, £20,680 is taxable, all in the 20% band, so £4,136.
- National Insurance: 8% on the £22,430 earned between £12,570 and £35,000, charged on the full salary, so £1,794.40.
Take the £1,750 pension, £4,136 income tax and £1,794.40 National Insurance off the £35,000 gross, and you are left with about £27,320 a year, which is roughly £2,277 a month in take-home pay. The £1,750 going into the pension is still yours, just saved for later. These are estimates to help you plan, and you can change the salary, pension and region in the take-home pay calculator to see your own figure. If you want to know where that money goes once it lands, the budget calculator can help you plan it.
Common questions
- How do I work out my take-home pay?
- Start with your gross salary, then take off income tax, National Insurance, any workplace pension contribution and any student loan repayment. What is left is your take-home pay, sometimes called net pay. Income tax and National Insurance both depend on how much you earn over set thresholds, so the sums are not a flat percentage. Our take-home pay calculator does the working for you in seconds.
- How much is £30,000 a year after tax?
- On a £30,000 salary in 2026/27 with no pension and no student loan, you pay 20% income tax on the £17,430 above the £12,570 personal allowance, which is £3,486, plus 8% National Insurance on the £17,430 above £12,570, which is £1,394.40. That leaves about £25,120 a year, or roughly £2,093 a month. A pension contribution or a student loan would lower it. This is an estimate, not advice.
- Why is my take-home pay less than I expected?
- The headline salary is your gross pay, before anything comes off. Income tax and National Insurance together take a meaningful slice once you earn over £12,570, and a workplace pension and any student loan come off on top. If you started a new job part way through the year, your tax code or an emergency tax code can also temporarily change what you take home until it settles.
- Does my pension contribution lower my tax?
- Usually yes. On the most common workplace setup, your pension contribution comes off your pay before income tax is worked out, so you pay tax on a smaller amount. It does not lower your National Insurance, which is still charged on your full salary. The result is that paying into a pension costs you less in take-home than the headline contribution, because part of it is money you would otherwise have paid in tax.
- Do I pay National Insurance on my whole salary?
- You pay nothing on the first £12,570, then 8% on earnings between £12,570 and £50,270, then 2% on anything above £50,270. Unlike income tax, National Insurance is worked out on your full salary and is not reduced by a workplace pension contribution. It is also not affected by the personal allowance, which only applies to income tax.
- At what salary do you start paying 40% tax?
- In England, Wales and Northern Ireland the 40% higher rate starts once your taxable income passes £37,700 above the personal allowance, which is a salary of about £50,270 with the full £12,570 allowance and no pension. Only the part of your income above that point is taxed at 40%, not your whole salary. A pension contribution can keep more of your income in the 20% band.
- Are these take-home figures exact?
- No. They are estimates to help you plan, not financial advice. They assume a standard tax code, the rest of the UK income tax bands and a net-pay workplace pension. Your real pay can differ because of your tax code, benefits in kind, salary sacrifice, different pension arrangements, or living in Scotland. Check your payslip and confirm anything important with HMRC.
About this article
Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked the 2026/27 rates, thresholds and student loan plans in this article against gov.uk and HMRC as the primary sources, with MoneyHelper for corroboration. The figures here are estimates to help you plan, not financial advice. Your real pay can differ because of your tax code, benefits in kind, a salary sacrifice arrangement, a different pension setup, or living in Scotland, so check your payslip and confirm anything important with HMRC. Last updated June 2026.