This calculator provides estimates based on current HMRC tax rates and thresholds for the 2025/26 tax year (6 April 2025 to 5 April 2026). It covers England, Wales, and Northern Ireland only — Scotland has different income tax rates. Figures are for guidance only and should not replace professional tax advice.
How UK Income Tax Works in 2025/26
Income tax in the UK is calculated on a progressive banded system. You don’t pay the same rate on your entire salary — instead, each portion of your income is taxed at the rate for that band. Your tax-free Personal Allowance for 2025/26 is £12,570, meaning you pay no income tax on the first £12,570 you earn.
The system is designed so that everyone benefits from the lower bands. Even someone earning £100,000 pays 0% on their first £12,570, 20% on the next portion, and 40% only on income above £50,270.
Current Tax Rates and Thresholds (2025/26)
Income Tax Bands (England, Wales & Northern Ireland)
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Important: The Personal Allowance reduces by £1 for every £2 earned above £100,000. This means it disappears entirely at £125,140, creating an effective 60% marginal tax rate between £100,000 and £125,140.
National Insurance Contributions (Class 1 — Employees)
| Band | Earnings | Rate |
|---|---|---|
| Below threshold | Up to £12,570 | 0% |
| Main rate | £12,571 – £50,270 | 8% |
| Upper rate | Over £50,270 | 2% |
Student Loan Repayments
Student loan repayments are deducted automatically through PAYE once you earn above the relevant threshold. The repayment is 9% of everything you earn above the threshold (except for Postgraduate Loans, which are 6%).
| Plan | Threshold (2025/26) | Rate |
|---|---|---|
| Plan 1 (pre-2012) | £24,990 | 9% |
| Plan 2 (post-2012) | £27,295 | 9% |
| Plan 4 (Scotland) | £31,395 | 9% |
| Plan 5 (post-2023) | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
You can be on multiple plans simultaneously — for example, a Plan 2 undergraduate loan and a Postgraduate Loan, in which case both deductions apply.
Pension Contributions
Workplace pensions affect your take-home pay, but how they do so depends on the method your employer uses. Under salary sacrifice, your gross salary is reduced before tax and NI are calculated — meaning you save on both. Under relief at source, contributions are taken from your net pay but you receive basic rate tax relief automatically (higher and additional rate taxpayers need to claim extra relief through self-assessment).
The minimum auto-enrolment contribution is 8% of qualifying earnings (5% employee + 3% employer), though many employers offer more generous schemes.
Worked Examples
Example 1
Average UK salary of £35,000
Gross annual salary: £35,000.
Income tax: £4,486 (£22,430 at 20%).
Employee NI: £1,794 (£22,430 at 8%).
Annual take-home: £28,720, or roughly £2,393 per month.
Effective tax rate: 12.8%.
Example 2
Higher rate taxpayer earning £65,000
Gross annual salary: £65,000.
Income tax: £11,432 (basic rate on £37,700, plus higher rate on £14,730).
Employee NI: £2,089 (main rate plus upper rate).
Annual take-home: £51,479, or roughly £4,290 per month.
Effective tax rate: 17.6%.
Example 3
The £100,000 trap
Gross annual salary: £105,000.
Due to the Personal Allowance taper, the effective marginal rate between £100,000 and £125,140 is 60%.
On the £5,000 above £100,000, you lose £2,500 of Personal Allowance, pay 40% tax on that extra allowance (£1,000), plus 40% on the £5,000 itself (£2,000), plus 2% NI (£100).
Total deductions on that £5,000: £3,100 – a 62% marginal rate.
Annual take-home: £74,579, or roughly £6,215 per month
Many people find it worth increasing pension contributions to bring taxable income back below £100,000.
Common Mistakes to Avoid
- Thinking the higher rate applies to your whole salary. Crossing into the 40% bracket doesn’t mean all your income is taxed at 40%. Only the portion above £50,270 is taxed at the higher rate.
- Not accounting for the £100k Personal Allowance trap. The 60% effective rate between £100k and £125,140 catches many people by surprise. Pension contributions or charitable donations can reduce your adjusted net income below this threshold.
- Forgetting student loan repayments. These aren’t technically a tax but they reduce your take-home pay in exactly the same way. On a £35,000 salary with a Plan 2 loan, that’s an extra £57 per month.
- Confusing salary sacrifice with net pay. Salary sacrifice reduces your gross pay before tax, giving you NI savings too. Relief at source only gives basic rate tax relief automatically — higher rate taxpayers must claim the rest.
Your take-home pay figures assume standard pension contributions – the pension calculator shows how changing your contribution rate affects both your salary and your retirement pot.
A common rule of thumb is borrowing 4x your salary – once you know your take-home, the mortgage calculator shows what that looks like on a monthly basis.
Frequently Asked Questions
What’s the difference between gross and net salary?
Gross salary is your total pay before any deductions. Net salary (take-home pay) is what actually lands in your bank account after income tax, National Insurance, pension contributions, and student loan repayments have been deducted.
Does this calculator work for self-employed income?
No — self-employed individuals pay different National Insurance rates (Class 2 and Class 4) and handle tax differently through self-assessment. This calculator is designed for employees on PAYE.
Why is the tax-free allowance frozen?
The government froze the Personal Allowance at £12,570 and the higher rate threshold at £50,270 until April 2028. Because wages generally rise with inflation, this “fiscal drag” gradually pulls more people into higher tax bands — an effective tax increase without changing the headline rates.
Are bonuses taxed differently?
No. Bonuses are taxed as regular income through PAYE. They may appear to be taxed at a higher rate because your employer applies the tax in the month it’s paid, but it evens out over the tax year. If you’re overtaxed, HMRC adjusts your tax code or you receive a refund.