George HarrisonPerhaps you’re weighing up the perks of a new job or a promotion, or maybe you simply want to check how much of your salary will make it into your pay packet or bank account each month.
Either way, our handy salary calculator will help you quickly work out your take-home pay – factoring in taxes and pension contributions.
How to use our salary calculator to work out your take-home pay
Our salary calculator works out how much a typical employed worker can expect to pay each month in Income Tax and National Insurance contributions (NICs), based on their salary.
To see how much pay you’re likely to be left with after these taxes have been deducted from your pay, simply input your gross annual income (otherwise known as your salary).
This calculator assumes you’re on the default tax code with a standard personal allowance. Your tax code consists of numbers and letters, and for the 2024/25 tax year the most common code is 1257L.
We’ll also need to know how old you are and how much you’re currently contributing to your workplace pension through auto-enrolment. From there, we can work out how much of your pay you’re likely to be left with after tax and pension contributions each month.
Many workers are now paying less National Insurance, in the light of recent tax changes. Our calculator takes into consideration the latest National Insurance reduction, which was announced as part of the 2024 Spring Budget.
Please note that this calculator is based on Income Tax rates and brackets for England, Wales and Northern Ireland. Since Scotland has a slightly different tax system, this calculator won’t give an accurate result if you’re living north of the border.
Likewise, if you’re self-employed, taxes and pensions don’t work in quite the same way as for salaried employees. This calculator has been designed with salaried, employed pay-as-you-earn (PAYE) workers in mind.
Warning: Our calculator makes various assumptions about your salary and pension and does not take into account student loan repayments. It is designed to offer guidance on your take-home pay and should not be used to base any decisions you make about your finances or work.
How much tax do I pay?
How much you pay in tax will depend on your age, your salary, and various other factors.
Our salary calculator can provide a rough calculation to show how much a typical employed worker would be expected to pay in National Insurance contributions and Income Tax, based on your salary.
Most employed workers in the UK have Income Tax payments and National Insurance contributions deducted by their employer from their wages at source. PAYE is the system HM Revenue & Customs (HMRC) uses to collect tax from salaried workers.
This is why the amount that actually lands in your bank account each month (your net salary) may not be the same as the headline figure you are paid each month (your gross salary).
If you make pension contributions or student loan repayments from your salary, these will also be deducted from your gross earnings.
What is Income Tax?
Income Tax is paid on most earned income, including your salary, pensions, some benefits, rental earnings if you are a landlord, and company profits.
In the UK, if you are a salaried employee, Income Tax is likely to be deducted from your income at source – meaning it is paid to HMRC automatically each month.
Income Tax in England, Wales and Northern Ireland is currently charged at the following rates:
- 20% on earnings from £12,571 to £50,270 (basic rate)
- 40% on earnings from £50,271 to £125,140 (higher rate)
- 45% on earnings over £125,140 (additional rate)
Your personal allowance, meanwhile, is the amount of income you can earn before you have to pay tax on it.
The Personal Allowance for 2024/25 is £12,570, so no Income Tax will be charged on earnings at or below this level.
What is National Insurance?
National Insurance is a tax paid by most UK workers. For most PAYE employees, NICs will automatically come out of your wages – just like Income Tax.
NICs paid by employees are referred to as Class 1 National Insurance contributions.
Class 1 National Insurance rates for most people for the 2024/25 tax year are:
- 8% on income of £242 to £967 a week (£1,048 to £4,189 a month)
- 2% on income over £967 a week (£4,189 a month)
You will not pay any Class 1 National Insurance on earnings below these thresholds.
Paying National Insurance contributions qualifies you for certain benefits and the state pension.
How much are student loan repayments?
Employees with student loans will typically repay their loans through PAYE.
How much you pay each month depends on the type of student loan you have and how much you earn.
You’ll only repay your student loan when your income is over a given threshold amount. Your threshold will depend on your repayment plan.
Then you’ll repay either:
- 9% of your income over the threshold if you’re on Plan 1, 2, 4 or 5
- 6% of your income over the threshold if you’re on a Postgraduate Loan plan
You can check which repayment plan you’re on by visiting gov.uk, which also has a guide explaining each plan.
Image source: Getty Images
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