How to Calculate Salary After Tax in the UK: Gross vs Net and Common Deductions (2026/27)

Understanding Gross Salary vs Net Take-Home Pay

When you see a job advert offering a salary of £35,000, that figure is your gross salary – the total amount your employer agrees to pay you before any deductions. What actually lands in your bank account each month is your net pay or take-home pay, which is your gross salary minus Income Tax, National Insurance, pension contributions, student loan repayments, and any other deductions such as salary sacrifice arrangements.

Knowing how to calculate salary after tax is essential for budgeting, comparing job offers, and understanding your payslip. This guide explains the key deductions for the 2026/27 tax year, using official rates from HMRC and GOV.UK.

How to Calculate Salary After Tax: Step by Step

Your employer uses the Pay As You Earn (PAYE) system to deduct tax and National Insurance from each payslip. Here’s how the calculation works:

1. Start with Gross Annual Salary

This is the figure in your employment contract. For example, £35,000 per year.

2. Apply the Personal Allowance

Everyone has a tax-free Personal Allowance. For 2026/27, it is £12,570. You pay no Income Tax on earnings up to this amount.

3. Calculate Income Tax

Income Tax is charged on the portion of your salary above the Personal Allowance. The bands for England, Wales, and Northern Ireland are:

• Basic rate (20%): £12,571 to £50,270
• Higher rate (40%): £50,271 to £125,140
• Additional rate (45%): over £125,140

On a £35,000 salary, taxable income is £35,000 – £12,570 = £22,430. All of this falls within the basic rate band, so Income Tax is 20% × £22,430 = £4,486 per year.

4. Calculate National Insurance

Employee National Insurance (NI) is calculated separately on your earnings. For most employees (Category A), the rates are:

• 0% on earnings up to £12,570
• 8% on earnings between £12,571 and £50,270
• 2% on earnings above £50,270

On £35,000, NI is 8% × (£35,000 – £12,570) = 8% × £22,430 = £1,794.40 per year.

5. Deduct Student Loan Repayments (if applicable)

If you have a student loan, repayments are taken at 9% of earnings above your plan’s threshold (or 6% for a Postgraduate Loan). The thresholds for 2026/27 are:

• Plan 1: £26,900
• Plan 2: £29,385
• Plan 4 (Scotland): £33,795
• Plan 5: £25,000
• Postgraduate Loan: £21,000

For example, on Plan 2 with a £35,000 salary, you repay 9% × (£35,000 – £29,385) = 9% × £5,615 = £505.35 per year.

6. Subtract Pension Contributions

Pension contributions can be taken before tax (salary sacrifice or net pay arrangement) or after tax (relief at source). This affects your take-home pay and tax calculation. For simplicity, the examples below assume no pension contributions.

7. Arrive at Take-Home Pay

Take-home pay = Gross salary – Income Tax – National Insurance – Student Loan – Pension contributions.

For a £35,000 salary with no pension or student loan:

• Income Tax: £4,486
• National Insurance: £1,794.40
• Take-home pay: £28,719.60 per year (£2,393.30 per month)

Example Take-Home Pay Figures for 2026/27

The table below shows estimated take-home pay for common salary levels (England, standard tax code, no pension or student loan):

Gross Salary	Income Tax	National Insurance	Take-Home (Annual)	Take-Home (Monthly)
£20,000	£1,486	£594	£17,920	£1,493
£25,000	£2,486	£994	£21,520	£1,793
£30,000	£3,486	£1,394	£25,120	£2,093
£35,000	£4,486	£1,794	£28,720	£2,393
£40,000	£5,486	£2,194	£32,320	£2,693
£50,000	£7,486	£2,994	£39,520	£3,293
£60,000	£11,432	£3,211	£45,357	£3,780
£75,000	£17,432	£3,511	£54,057	£4,505
£100,000	£27,432	£4,011	£68,557	£5,713

Source: GOV.UK Income Tax rates and HMRC National Insurance rates.

Scottish Income Tax: A Different System

If you live in Scotland, your Income Tax is calculated using different bands and rates. National Insurance and student loan rules remain the same UK-wide.

Scottish bands for 2026/27:

• Starter rate: 19% on £12,571–£15,397
• Basic rate: 20% on £15,398–£27,491
• Intermediate rate: 21% on £27,492–£43,662
• Higher rate: 42% on £43,663–£75,000
• Advanced rate: 45% on £75,001–£125,140
• Top rate: 48% above £125,140

On lower and middle incomes, the difference is small – about £15 more per year on £35,000. But from around £43,660, the 42% higher rate applies, meaning a Scottish taxpayer on £50,000 takes home about £1,496 less per year than someone in England. Use our take-home calculator and select Scotland to see your exact figures.

The National Living Wage and Minimum Wage

For 2026/27, the National Living Wage for workers aged 21 and over is £12.71 per hour. At 37.5 hours per week, this gives a gross annual salary of approximately £24,785. After Income Tax and National Insurance, the monthly take-home pay is around £1,780.

This is a significant increase from the 2025 rate of £12.21 per hour. The National Minimum Wage for younger workers and apprentices is lower.

Common Deductions That Affect Take-Home Pay

Pension Contributions

Many employers offer workplace pensions. Contributions can be taken:

• Salary sacrifice: reduces your gross salary before tax and NI, saving you tax and NI.
• Relief at source: you contribute from net pay, and the government adds basic rate tax relief.

A 5% employee contribution on a £35,000 salary would reduce take-home pay by about £1,750 per year (depending on the arrangement).

Student Loans

If you have a student loan, repayments are automatic through PAYE once your earnings exceed the threshold. The amount deducted depends on your plan and earnings. For example, a Plan 2 borrower earning £35,000 repays about £505 per year.

Benefits in Kind

Company cars, private health insurance, and other non-cash benefits are taxed through your tax code, reducing your Personal Allowance and increasing your tax bill.

Why Understanding Gross vs Net Matters

When you calculate salary for a job offer or budget, always focus on take-home pay. A higher gross salary may not mean significantly more in your pocket if you move into a higher tax band, lose allowances, or have student loan deductions. Similarly, a salary just above the Personal Allowance can mean a large jump in net income.

For more detailed breakdowns and to run your own numbers, explore our salary articles and use our take-home calculator. Remember that all figures are estimates – your actual take-home pay depends on your exact tax code, pension, benefits, and other personal circumstances. Always check your payslip and official GOV.UK guidance.