In this guide

Is your payslip a lot lower than the salary in your contract? Two things take most of the difference: Income Tax and National Insurance (NI).

The formula

Take-home pay = gross pay − Income Tax − National Insurance − other deductions

Other deductions include pension contributions and student loan repayments, covered at the end.

Income Tax

These rates are for England, Wales and Northern Ireland. Scotland's rates are different.

Annual income Rate
Up to £12,570 (Personal Allowance) 0%
£12,571 to £50,270 20%
£50,271 to £125,140 40%
Over £125,140 45%

Note: once your income is over £100,000, your Personal Allowance goes down by £1 for every £2 you earn. At £125,140 it's gone completely.

National Insurance

Employee National Insurance is worked out separately for each pay period:

Monthly pay Rate
Up to £1,048 0%
£1,048 to £4,189 8%
Over £4,189 2%

In annual terms, that's roughly 0% up to £12,570, 8% from £12,570 to £50,270, and 2% above £50,270.

Three examples

These are averaged over the full year and include only Income Tax and National Insurance, not pension or student loan.

Salary £30,000

  • Income Tax: (£30,000 − £12,570) × 20% = £3,486
  • National Insurance: (£30,000 − £12,570) × 8% = £1,394.40
  • Take-home: £25,119.60 a year, about £2,093 a month

Salary £60,000

  • Income Tax: £37,700 × 20% + (£60,000 − £50,270) × 40% = £7,540 + £3,892 = £11,432
  • National Insurance: £37,700 × 8% + £9,730 × 2% = £3,016 + £194.60 = £3,210.60
  • Take-home: £45,357.40 a year, about £3,780 a month

Salary £110,000 (Personal Allowance reduced)

  • Personal Allowance: £12,570 − (£110,000 − £100,000) ÷ 2 = £7,570
  • Income Tax: £37,700 × 20% + (£102,430 − £37,700) × 40% = £7,540 + £25,892 = £33,432
  • National Insurance: £3,016 + (£110,000 − £50,270) × 2% = £4,210.60
  • Take-home: £72,357.40 a year, about £6,030 a month

Between £100,000 and £125,140, each extra £100 you earn costs £60 in Income Tax (the 40% rate, plus 20% from the shrinking allowance), and £2 in National Insurance.

Starting work part-way through the year?

  • Income Tax is cumulative over the tax year. Allowance you didn't use in earlier months carries forward, so you may pay little or no tax in your first few months.
  • National Insurance isn't cumulative. Each pay period stands alone, so NI starts as soon as your monthly pay goes over £1,048.

Other common deductions

  • Pension: workplace pension contributions reduce your take-home pay, but usually reduce the tax you pay too.
  • Student loan: once your income is over the threshold for your repayment plan, you repay 9% of the amount above it (6% for a Postgraduate Loan). Each plan has a different threshold.

Payslip doesn't match?

Check your tax code first. If you have one job and the standard Personal Allowance, it's usually 1257L. If you see BR or 0T, or W1 or M1 at the end, the tax taken can be very different from the figures above. See the guide to tax codes.

Sources checked: 1 October 2026 · Tax year: 2026 to 2027 · Sources are official GOV.UK pages.

This is general information, not tax advice for your situation. How it applies depends on your full circumstances.