Minimum Wage London 2026: How Take-Home Pay Is Calculated After Tax and NI

Minimum Wage London 2026: How Take-Home Pay Is Calculated

If you are earning the minimum wage in London in 2026, understanding what actually reaches your bank account after deductions is essential. The headline hourly rate — £12.71 for workers aged 21 and over from April 2026 — is only part of the story. Your take-home pay depends on your contracted hours, Income Tax, National Insurance, and any pension or student loan contributions.

This article explains how each deduction works, using the 2026/27 rates, so you can see exactly where your money goes.

What Is the Minimum Wage in London in 2026?

The minimum wage is set nationally, so the rates are the same in London as everywhere else in the UK. From April 2026:

• National Living Wage (21 and over): £12.71 per hour
• National Minimum Wage (18 to 20): £10.85 per hour
• National Minimum Wage (under 18): £8.00 per hour
• Apprentice rate: £8.00 per hour (for apprentices under 19, or 19 and over in their first year)

These rates are published by GOV.UK and apply across England, Scotland, Wales and Northern Ireland.

Gross Salary on the National Living Wage

Your annual gross salary depends on your contracted weekly hours. Most full-time roles are between 35 and 40 hours per week. Using 52 paid weeks per year:

Weekly hours	Hourly rate	Annual gross
37.5	£12.71	£24,785
40	£12.71	£26,437
35	£12.71	£23,132

These figures assume all hours are paid at the minimum wage. If you work overtime or receive shift premiums, your gross pay will be higher.

How Income Tax and National Insurance Are Calculated

Both deductions are calculated on your earnings above certain thresholds. They do not stack — each is worked out independently on the same pay.

Income Tax (2026/27)

• Personal Allowance: first £12,570 tax-free
• Basic rate: 20% on earnings from £12,571 to £50,270
• Higher rate: 40% on earnings from £50,271 to £125,140
• Additional rate: 45% on earnings above £125,140

National Insurance (2026/27)

• Primary threshold: £12,570 per year (0% below this)
• Main rate: 8% on earnings between £12,571 and £50,270
• Upper rate: 2% on earnings above £50,270

National Insurance is calculated per pay period, not annually, so your employer deducts it from each payslip separately.

Take-Home Pay Worked Example: 37.5 Hours per Week

On a gross salary of £24,785:

Component	Annual	Monthly
Gross pay	£24,785	£2,065
Income Tax (20% on £12,215 above allowance)	−£2,443	−£204
National Insurance (8% on £12,215 above threshold)	−£977	−£81
Take-home pay	£21,364	£1,780

This works out at roughly £10.96 per hour after deductions.

Take-Home Pay Worked Example: 40 Hours per Week

On a gross salary of £26,437:

Component	Annual	Monthly
Gross pay	£26,437	£2,203
Income Tax (20% on £13,867 above allowance)	−£2,773	−£231
National Insurance (8% on £13,867 above threshold)	−£1,109	−£92
Take-home pay	£22,554	£1,880

How Pension Contributions Affect Take-Home Pay

If you are enrolled in a workplace pension, your contributions come out of your gross pay before Income Tax and National Insurance are calculated (if using salary sacrifice) or after tax (if using relief at source).

A typical minimum contribution is 5% of your gross pay. On £24,785, that is £1,239 per year. With salary sacrifice, your taxable pay reduces to £23,546, saving you both Income Tax and NI on that amount. Your take-home pay would be roughly £20,100 per year instead of £21,364 — but you also build a pension pot.

Student Loan Repayments on the Minimum Wage

Most student loan plans have repayment thresholds above minimum wage earnings, so many workers on the National Living Wage will not make any repayments. The thresholds for 2026/27 are:

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

At 37.5 hours per week (£24,785), none of these plans apply except the Postgraduate Loan, which starts at £21,000. If you have a postgraduate loan, you would repay 6% of earnings above £21,000 — about £227 per year or £19 per month.

At 40 hours per week (£26,437), Plan 5 would also apply: 9% of earnings above £25,000, which is about £129 per year or £11 per month.

How London Compares: The Median Salary

While the minimum wage is the legal floor, the typical London worker earns significantly more. According to ONS ASHE 2025, the median full-time salary in London is £47,455 per year — about 22% above the UK median of £39,039.

On £47,455 in 2026/27, take-home pay after Income Tax and National Insurance is approximately £37,687 per year, or £3,141 per month. That is nearly double the take-home pay of a minimum wage worker on 37.5 hours.

Scotland: Different Income Tax Bands

If you work in Scotland, your Income Tax is calculated using Scottish bands and rates. For a minimum wage earner, the main difference is the starter rate of 19% on the first £3,967 of taxable income, rather than 20%. This saves about £40 per year compared to England, meaning take-home pay of roughly £1,784 per month instead of £1,780.

Key Takeaways

• The minimum wage in London in 2026 is £12.71 per hour for workers aged 21 and over, the same as the rest of the UK.
• Take-home pay on 37.5 hours is about £1,780 per month after tax and NI.
• Income Tax and National Insurance are calculated on earnings above £12,570, each at their own rates.
• Pension contributions and student loans reduce take-home pay further, but may be worthwhile for long-term benefits.
• The London median salary is much higher, at £47,455 gross, giving take-home pay of about £3,141 per month.

For a personalised calculation, use the take-home calculator or browse more salary articles for detailed comparisons.

Frequently Asked Questions

What is the minimum wage in London in 2026?

The National Living Wage for workers aged 21 and over is £12.71 per hour from April 2026, the same across all UK regions including London. For 18 to 20 year olds the rate is £10.85 per hour, and for under-18s and apprentices it is £8.00 per hour. These rates are set by the UK Government and apply uniformly in England, Scotland, Wales and Northern Ireland.

How much take-home pay does a minimum wage worker in London get after tax?

A full-time worker on the National Living Wage (£12.71/hour) working 37.5 hours per week earns about £24,785 gross per year. After Income Tax (20% on earnings above £12,570) and National Insurance (8% on earnings above £12,570), take-home pay is approximately £21,364 per year, or £1,780 per month. At 40 hours per week, gross pay rises to £26,437 and take-home to about £22,554 per year (£1,880 per month). These figures assume no pension contributions or student loan repayments.

Does the minimum wage in London differ from the rest of the UK?

No, the minimum wage rates are set nationally and are identical in London, the rest of England, Scotland, Wales and Northern Ireland. However, take-home pay can vary slightly because Scotland uses different Income Tax bands. For a worker on the National Living Wage, the Scottish starter rate of 19% on the first £3,967 of taxable income results in about £40 less Income Tax per year, meaning take-home pay is roughly £1,784 per month compared to £1,780 in England.