Take-home pay calculator

The 62% band nobody tells you about

Once your income passes £100,000, your personal allowance is withdrawn by £1 for every £2 you earn above it. By £125,140 it has gone entirely. The allowance is worth £12,570, so losing it costs you £5,028 in tax spread across a £25,140 stretch of salary.

The effect is that in that band you pay 40% on the extra salary, plus another 20% in effect from the allowance disappearing, plus 2% National Insurance. That is a marginal rate of 62%. A £1,000 pay rise leaves you £380 better off. Above £125,140 the marginal rate drops back to 47%, which is why people describe it as a spike rather than a slope.

This is the one place in the UK tax system where a pension contribution has an outsized effect. The taper is measured on adjusted net income, which is your income after pension contributions that get relief. Put enough into a pension to bring your adjusted net income back to £100,000 and the whole allowance comes back, at an effective cost of 38p in the pound.

The calculator shows your marginal rate for exactly this reason. It is the number that tells you what a pay rise, a bonus or an extra shift is actually worth, and it is almost never the headline rate on your tax band.

Salary sacrifice and a net pay arrangement are not the same thing

Both take your pension contribution out before Income Tax, so both look identical on a tax calculation. They are not identical on your payslip.

Under salary sacrifice, you agree a lower contractual salary and your employer pays the difference into your pension. Because your salary is genuinely lower, you pay less National Insurance too, and so does your employer. Many employers pass some or all of their saving on.

Under a net pay arrangement, your salary stays the same and the contribution is deducted from gross pay before tax is calculated. You get the Income Tax relief but not the National Insurance relief. On a £2,000 contribution, that difference is £160 a year for a basic rate employee and £40 for a higher rate one.

There is a third arrangement, relief at source, where the contribution comes out of your pay after tax and the pension provider claims 20% back from HMRC. A higher or additional rate taxpayer has to claim the rest through Self Assessment, and a great many people never do. This calculator does not model relief at source, and says so in the results.

Salary sacrifice also reduces the pay your student loan repayment is calculated on. A net pay arrangement does not. That is a small but real difference this calculator gets right and many do not.

Student loans are not a tax, but they come off the same payslip

There are five plans and they have different thresholds. Plan 1 covers pre-2012 English and Welsh courses and all Northern Irish ones. Plan 2 covers English and Welsh courses started between 2012 and 2023. Plan 4 is Scottish. Plan 5 covers English courses started from August 2023. The Postgraduate Loan is separate again.

The undergraduate plans take 9% of everything above the threshold. The Postgraduate Loan takes 6%. If you have both, you pay both, on top of each other rather than instead of each other. The amount you owe makes no difference at all to what comes off each month.

One thing worth knowing: the deduction is calculated on each pay period, not on your annual income. A bonus month can push you over the monthly threshold and trigger a deduction even if your annual pay is below the yearly threshold. You can reclaim that after the end of the tax year, and most people never realise they can.

Voluntary extra repayments are exactly that, voluntary and non-refundable. Because the debt is written off after a set period regardless of the balance, paying it down early only helps people who would otherwise clear it in full. For most graduates it is closer to a graduate tax than a loan, and spare money usually does more good against a mortgage.

Scotland is genuinely different, and the gap is widest in the middle

Scotland sets its own Income Tax rates and bands on earned income. There are six bands rather than three, and the higher rate starts at £43,663 rather than £50,270.

That creates an unusual stretch between £43,663 and £50,270 where a Scottish taxpayer pays 42% Income Tax while still paying 8% National Insurance, because the National Insurance upper earnings limit is set UK-wide at £50,270. The combined marginal rate in that band is 50%. Above it, National Insurance drops to 2% and the marginal rate falls to 44%.

Below around £29,000 a Scottish taxpayer pays slightly less than someone on the same salary elsewhere in the UK, because of the starter rate. Above it they pay more, and the gap widens with income.

Savings interest and dividends are taxed at the rest-of-UK rates wherever you live, so a Scottish taxpayer uses the same Personal Savings Allowance and the same savings rates as everyone else. Only earned income follows the Scottish bands.

The law this tool relies on

Every source below is primary legislation, government guidance, a statutory regulator or a statutory ombudsman. We do not cite comparison sites, trade bodies or news articles, because a citation is only as good as its source.

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