How is UK income tax calculated?

UK income tax uses progressive bands. For 2025/26: 0% on the first £12,570 (Personal Allowance), 20% from £12,571 to £50,270 (Basic Rate), 40% from £50,271 to £125,140 (Higher Rate), and 45% above £125,140 (Additional Rate). Scotland has different rates.

What is the difference between gross and net salary?

Gross salary is your total pay before deductions. Net salary (take-home pay) is what you receive after income tax, National Insurance, pension contributions, and student loan repayments are deducted.

How do student loan repayments work in the UK?

Student loan repayments are automatic via PAYE. Plan 1: 9% above £24,990. Plan 2: 9% above £27,295. Plan 4 (Scotland): 9% above £31,395. Postgraduate: 6% above £21,000. Balances are written off after 25-40 years.

Does pension contribution reduce my tax bill?

Yes. Pension contributions reduce your taxable income. Basic rate taxpayers save 20% — every £100 costs £80. Higher rate taxpayers save 40% — every £100 costs £60. Salary sacrifice also saves National Insurance.

2025/26 Tax Year

UK Salary & Tax Calculator

See exactly what you take home after income tax, National Insurance, student loans, and pension. Plan your expenses and get personalised money guidance.

Your Income

Tax Year:

Salary

£/year

£0£200,000+

Annual Bonus

Employment Type

Region

Pension Contribution: 5%

0%40%

Student Loan

Take-Home Pay

Monthly

£2,277

£27,320/year£525/week£105/day

Take-Home £27,320 (78%)

Income Tax £4,136 (12%)

NI £1,794 (5%)

Pension £1,750 (5%)

Income Tax

£4,136

National Insurance

£1,794

Student Loan

£0

Effective Tax Rate

16.9%

Employer NI

£4,500

Cost to Employer

£41,250

Marriage Allowance

Save £252/yr

View Tax Band Details

Income Tax Bands

Band	Rate	Income	Tax
Personal Allowance	0%	£12,570	£0
Basic Rate (20%)	20%	£20,680	£4,136

National Insurance Bands

Band	Rate	Income	Tax
Below threshold	0%	£12,570	£0
Main rate	8%	£22,430	£1,794

Monthly Expense Planner

Enter your details — we'll tell you if anything looks high for your income

Your Age

Emergency Fund?

Recommended max spend on £2,277/month take-home:

Rent / Mortgage: ≤£797(35%)Bills & Utilities: ≤£228(10%)Transport: ≤£228(10%)Food & Groceries: ≤£341(15%)Subscriptions: ≤£114(5%)

Rent / Mortgage

Bills & Utilities

Transport

Food & Groceries

Subscriptions

Monthly Net

£2,277

Expenses

£0

Disposable

£2,277

Smart Money Guide

For education only. Not financial advice. Speak to an FCA-regulated adviser.

AI-personalised recommendations based on your £35,000 salary

Based on your take-home of £2,277/month, we recommend saving at least £341/month (15%). Enter expenses above for a more precise plan.

Strategy:

Where should your £341/month go?

Split it: At your income, diversify across pension, ISA, and savings. Your pension gets 20% tax relief, and your ISA grows tax-free — use both.

Workplace Pension (30%)

£102/mo

Stocks & Shares ISA (35%)

£119/mo

Emergency / Cash Savings (20%)

£68/mo

Lifetime ISA (15%)

£52/mo

Workplace Pension

Step 1£102/mo

Top up for 20% tax relief on every pound.

AI recommendation — £102/month

Add £102/month on top of your employer's contribution. Every £100 costs you only £80 after 20% tax relief. If your employer offers salary sacrifice, you'll save an extra 8% NI too.

Stocks & Shares ISA

Step 2£119/mo

Invest up to £20,000/year completely tax-free.

AI recommendation — £119/month

Invest £119/month into a global index fund (Vanguard FTSE Global All Cap, 0.23% fee). Platforms: Vanguard Investor, InvestEngine, or Trading 212. After 10 years at 7% avg return: ~£20,597.

Emergency / Cash Savings

Step 3£68/mo

Easy-access buffer for life's surprises.

AI recommendation — £68/month

Keep £68/month flowing into a high-interest account (Chase, Chip). Target 3–6 months' expenses (£6,830–£13,660). Also use for short-term goals (1–3 years).

Lifetime ISA

Under 40s£52/mo

25% government bonus — up to £1,000/year free.

AI recommendation — £52/month

Put £52/month into a LISA (Moneybox or AJ Bell). The government adds 25% on top. Use for your first home (up to £450k) or retirement at 60. Max £4,000/year. Warning: 25% penalty for non-qualifying withdrawals.

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Not Financial Advice

The information and recommendations on this site are for educational purposes only and do not constitute financial advice. Everyone's financial situation is unique. Before making any financial decisions, please consult a qualified independent financial adviser (IFA) regulated by the FCA. Tax calculations are estimates based on published HMRC rates and may not reflect your exact circumstances.

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FAQ

Common Questions

How to Calculate Your UK Take-Home Pay

Understanding your take-home pay is essential for financial planning. Your net salary depends on several factors including your gross income, tax code, pension contributions, and whether you have student loan repayments. Our UK salary calculator handles all of these automatically.

UK Tax Bands for 2025/26

The UK uses a progressive tax system. You only pay higher rates of tax on income within each band, not on your entire salary. The Personal Allowance of £12,570 means you pay no income tax on this portion. The Basic Rate of 20% applies to income between £12,571 and £50,270, the Higher Rate of 40% to income between £50,271 and £125,140, and the Additional Rate of 45% to income above £125,140.

National Insurance Contributions

National Insurance is a separate deduction from your salary. For 2025/26, employees pay 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Self-employed individuals pay Class 4 NI at slightly different rates. NI contributions count towards your State Pension entitlement.