UK tax · 3 min read

How UK Take-Home Pay Is Worked Out (2026/27)

A plain-English walk through income tax, National Insurance and student loans on a UK salary, with worked examples using 2026/27 figures.

By the Handy Tools Desk team · Published 14 November 2026

Your payslip starts with your gross salary and ends with a much smaller number. The gap is made up of three main deductions: income tax, National Insurance and, if you have one, a student loan repayment. This article shows how each one is worked out for the 2026/27 tax year, which runs from 6 April to 5 April. Every figure on this page comes from the official sources listed at the end.

If you would rather skip the maths, the take-home pay calculator does all of it in your browser in a few seconds.

Step 1: the Personal Allowance

Most people can earn a certain amount each year before paying any income tax. This is the Personal Allowance, and for 2026/27 it is £12,570.

The allowance shrinks for high earners. Once your income goes above £100,000, you lose £1 of allowance for every £2 you earn over that level. By the time income reaches £125,140 the allowance has gone completely. In that range each extra pound is taxed very heavily, which is why it is often called the "60% trap".

Step 2: income tax bands

Everything you earn above your allowance is your taxable income, and it is taxed in slices. In England, Wales and Northern Ireland the slices are:

Only the money inside each slice is taxed at that slice's rate. Moving into a higher band never makes your whole salary more expensive – it only affects the pounds above the line.

Scotland sets its own income tax rates and bands, with six bands starting at 19% and going up to 48%. If you live in Scotland the calculator lets you switch to the Scottish rates.

Step 3: National Insurance

Employees pay Class 1 National Insurance on their earnings, worked out separately from income tax. For 2026/27:

• nothing on earnings up to £12,570 a year,
• 8% on earnings between £12,570 and £50,270,
• 2% on everything above £50,270.

National Insurance is the same everywhere in the UK, including Scotland. In practice it is worked out each pay period, so the yearly figures here are a close guide rather than an exact match for every payslip.

Step 4: student loan repayments

If you have a student loan, you repay a percentage of what you earn above your plan's threshold. A Plan 2 loan, for example, takes 9% of earnings above £29,385 a year. Plan 5 starts at £25,000, and a Postgraduate Loan takes 6% above £21,000. Earn less than your threshold and you repay nothing that year.

Worked example: a £35,000 salary

Here is the whole calculation for someone in England on £35,000 a year with no pension contributions and no student loan:

• Personal Allowance: £12,570, so taxable income is £22,430.
• Income tax: all of that sits in the basic-rate band, so tax is £4,486.00.
• National Insurance: £1,794.40.
• Take-home pay: £28,719.60 a year, or about £2,393.30 a month.

The same salary in Scotland gives £28,704.53 a year, because the Scottish bands are different.

Worked example: a £60,000 salary

At £60,000 part of the pay crosses into the higher-rate band:

• Income tax: £11,432.00.
• National Insurance: £3,210.60 (the rate drops to 2% above £50,270).
• Take-home pay: £45,357.40 a year, about £3,779.78 a month.

What can change your number

• Pension contributions. Paying into a workplace pension by salary sacrifice lowers the pay that tax and National Insurance are worked out on, so it costs you less than the amount that goes into the pension.
• Your tax code. Benefits in kind, unpaid tax from earlier years or a second job can change the allowance your employer uses.
• Bonuses and overtime. These are taxed through the same bands, so a bonus can push part of your pay into a higher band for that period.

For a quick look at common salaries, our salary after tax table lists take-home pay from £15,000 to £150,000. If you work for yourself, read our guide to self-employed tax or try the self-employed tax calculator.

Frequently asked questions

Why is my payslip slightly different from the calculator?

Payroll works out tax and National Insurance each pay period, and your tax code may include adjustments the calculator does not know about. Over a full year, a normal salary with a standard tax code usually ends up very close to the calculator's figure.

Do I pay National Insurance after State Pension age?

No. Once you reach State Pension age you stop paying employee National Insurance, although you still pay income tax on your earnings.

Is take-home pay different in Wales and Northern Ireland?

No. Wales and Northern Ireland currently use the same income tax bands as England, so take-home pay is the same. Scotland is the only part of the UK with different bands.

Open the take-home pay calculator