Take-Home Pay Calculator: Understand Your Tax Code & Net Salary (2025)
Ultimate Salary Calculator Team
Our content is written and reviewed by finance and tax enthusiasts to ensure accuracy.
Getting a new job offer? Wondering how much you'll actually take home after tax and National Insurance? Or maybe you've noticed your tax code has changed and you're not sure what it means for your pay packet?
Understanding your take-home pay isn't just about basic tax rates – there are tax codes, National Insurance thresholds, student loan repayments, pension contributions, and more. Let's break down exactly how much of your salary you'll actually see each month.
UK Tax Rates and Thresholds 2025-26
The UK tax system has several bands, and understanding these is crucial for calculating your take-home pay:
Income Tax Rates (England, Wales, NI)
- Personal allowance: £12,570 (0% tax)
- Basic rate: 20% on income from £12,571 to £50,270
- Higher rate: 40% on income from £50,271 to £125,140
- Additional rate: 45% on income above £125,140
Scottish Income Tax Rates
- Personal allowance: £12,570 (0% tax)
- Starter rate: 19% on £12,571-£14,876
- Basic rate: 20% on £14,877-£26,561
- Intermediate rate: 21% on £26,562-£43,662
- Higher rate: 42% on £43,663-£75,000
- Top rate: 47% on income above £75,000
National Insurance Rates
- Class 1 (employees): 12% on earnings £12,570-£50,270, then 2% above
- Employer's NI: 13.8% on earnings above £9,100 (doesn't affect your take-home)
Understanding Your Tax Code
Your tax code is crucial for calculating your take-home pay correctly. It tells your employer how much tax-free income you're entitled to each year.
Common Tax Codes Explained
Standard Tax Codes
- 1257L: Standard code - £12,570 personal allowance
- 1257M: Marriage allowance received (extra £1,260)
- 1257N: Marriage allowance transferred to spouse
- BR: Basic rate (20%) on all income - no allowance
- D0: Higher rate (40%) on all income
- D1: Additional rate (45%) on all income
Special Circumstances
- K codes: You owe tax from previous years
- NT: No tax to pay (rare)
- 0T: No personal allowance
- Numbers lower than 1257: Reduced allowance (company benefits/second job)
- Numbers higher than 1257: Increased allowance (work expenses)
When Your Tax Code Changes
Your tax code might change if:
- You get company benefits: Car, health insurance, etc.
- You have a second job: Usually gets BR code
- You claim work expenses: Increases your allowance
- You owe tax from previous years: Reduces your allowance
- Your pension contributions change: Affects allowance calculation
Step-by-Step Take-Home Pay Calculation
Let's work through a complete example to show exactly how your take-home pay is calculated:
Example: £45,000 Salary with Standard Tax Code 1257L
Step 1: Calculate Taxable Income
- Gross salary: £45,000
- Personal allowance: £12,570
- Taxable income: £45,000 - £12,570 = £32,430
Step 2: Calculate Income Tax
- All £32,430 is in basic rate band (20%)
- Income tax: £32,430 × 20% = £6,486
Step 3: Calculate National Insurance
- NI on £32,430 (amount above £12,570 threshold)
- National Insurance: £32,430 × 12% = £3,892
Final Take-Home Pay
Gross salary: £45,000
Income tax: -£6,486
National Insurance: -£3,892
Annual take-home: £34,622
Monthly take-home: £2,885
Additional Deductions That Affect Take-Home Pay
Student Loan Repayments
If you have a student loan, you'll pay 9% of your income above the repayment threshold:
Student Loan Thresholds 2025
- Plan 1: £24,990
- Plan 2: £27,295
- Plan 4 (Scotland): £31,395
- Plan 5 (2023+ starters): £25,000
Example: £45,000 with Plan 2 Loan
- Income above threshold: £45,000 - £27,295 = £17,705
- Student loan payment: £17,705 × 9% = £1,593
- New take-home: £34,622 - £1,593 = £33,029
Pension Contributions
Workplace pension contributions reduce your taxable income, so they save you tax:
Pension Contribution Example
Scenario: £45,000 salary, 5% pension contribution
Pension contribution: £2,250
Reduced taxable income: £42,750
Tax saved: £450 (20% of £2,250)
Net cost of pension: £1,800
Value in pension: £2,250
Effective 20% bonus!
Take-Home Pay Across Different Salary Levels
Here's how take-home pay varies across different salary levels for someone with a standard tax code and no other deductions:
| Gross Salary | Income Tax | National Insurance | Take-Home Pay | Effective Tax Rate |
|---|---|---|---|---|
| £20,000 | £1,486 | £892 | £17,622 | 11.9% |
| £30,000 | £3,486 | £2,092 | £24,422 | 18.6% |
| £45,000 | £6,486 | £3,892 | £34,622 | 23.1% |
| £60,000 | £10,386 | £5,092 | £44,522 | 25.8% |
| £80,000 | £18,386 | £5,692 | £55,922 | 30.1% |
| £100,000 | £26,386 | £6,692 | £66,922 | 33.1% |
Special Situations That Affect Your Take-Home Pay
The £100,000 Tax Trap
There's a hidden tax trap for those earning over £100,000:
Personal Allowance Reduction
For every £2 you earn over £100,000, your personal allowance reduces by £1. This effectively creates a 60% tax rate on income between £100,000 and £125,140:
- 40% higher rate tax
- 2% National Insurance
- Plus the loss of personal allowance (effectively another 20%)
Company Benefits and Your Tax Code
Company benefits are added to your tax bill through your tax code:
Common Taxable Benefits
- Company car: Based on CO2 emissions and list price
- Private medical insurance: Premium paid by employer
- Fuel for private use: Fixed annual charge
- Low-interest loans: Interest saved vs 4% rate
Tax-Free Benefits
- Pension contributions: Up to annual allowance
- Cycle to work scheme: Bike purchase savings
- Eye tests: For VDU users
- Mobile phone: One phone per employee
Calculate Your Exact Take-Home Pay
Use our salary calculator to get your precise take-home pay based on your specific circumstances:
Maximizing Your Take-Home Pay
1. Optimize Your Pension Contributions
Pension contributions reduce your taxable income:
- Basic rate taxpayer: Every £1 contributed costs you 80p
- Higher rate taxpayer: Every £1 contributed costs you 60p
- Additional rate taxpayer: Every £1 contributed costs you 55p
2. Use Salary Sacrifice Schemes
Salary sacrifice can save both income tax and National Insurance:
- Cycle to work: Save up to 42% on bike costs
- Electric car schemes: Significant tax savings
- Childcare vouchers: Save on nursery costs
- Additional pension: Save National Insurance too
3. Claim All Available Allowances
- Marriage allowance: Transfer £1,260 between spouses
- Work expenses: Uniforms, tools, professional fees
- Working from home: £6/week or actual costs
- Professional subscriptions: Relevant to your work
Common Take-Home Pay Mistakes
1. Ignoring Your Tax Code
Always check your tax code is correct. If it's wrong, you could be paying too much or too little tax, leading to problems later.
2. Not Understanding Student Loan Repayments
Student loan repayments are automatic and based on your income, not your debt amount. They stop automatically when your income drops.
3. Forgetting About Bonus Tax
Bonuses are taxed using your tax code, but might push you into higher rate bands. Large bonuses might be taxed at emergency rates initially.
4. Not Maximizing Pension Contributions
Not contributing enough to get your employer's full pension match is like turning down free money.
Planning for Tax Year Changes
Tax rates and thresholds can change each April. For 2025-26:
- Personal allowance: Frozen at £12,570 until 2028
- Higher rate threshold: Frozen at £50,270 until 2028
- National Insurance: Thresholds aligned with income tax
- Student loan thresholds: Vary by plan type
These freezes mean more people will pay higher rates of tax as their salaries increase with inflation.
Your Next Steps
- Check your tax code: Make sure it's correct on your payslip
- Use our calculator: Get your exact take-home pay
- Review your pension: Are you getting the full employer match?
- Consider salary sacrifice: Could you save tax and NI?
- Plan for changes: How will pay rises or new jobs affect you?
Understanding your take-home pay helps you make better financial decisions, from budgeting to negotiating salary increases. Our calculator takes all the complexity out of the calculation, giving you accurate results for any salary and circumstances.
Use our take-home pay calculator above to see exactly how much you'll receive after all deductions, and experiment with different scenarios to optimize your finances.