How your take-home pay is worked out
Your take-home pay is what lands in your bank account after deductions are taken from your gross (before-tax) salary. For most employees in 2026/27, four things come out of your pay: Income Tax, National Insurance, and — if they apply to you — pension contributions and student loan repayments.
The calculation runs in a set order. First, everyone gets a tax-free personal allowance of £12,570. You only pay Income Tax on the part of your salary above that. The amount above the allowance is then taxed in bands: 20% on the basic-rate slice, 40% on the higher-rate slice, and 45% on anything in the additional-rate band. National Insurance is worked out separately and does not use the personal allowance — it starts at £12,570 in its own right. Finally, any pension and student loan deductions are applied, and what remains is your take-home pay.
Worked example: £45,000 salary
Take someone earning £45,000 in England with no pension or student loan:
• Personal allowance: £12,570, leaving £32,430 of taxable income
• Income Tax: 20% of £32,430 = £6,486
• National Insurance: 8% of (£45,000 − £12,570) = £2,594
• Take-home pay: £45,000 − £6,486 − £2,594 = £35,920 a year (about £2,993 a month)
2026/27 Income Tax rates (England, Wales & N. 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% |
Scotland uses different bands, from a 19% starter rate up to a 48% top rate. Switch the region in the calculator above to see Scottish figures.
2026/27 National Insurance (Class 1, employees)
| Earnings | NI rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 – £50,270 | 8% |
| Over £50,270 | 2% |
You stop paying National Insurance once you reach State Pension age, even if you keep working.
Frequently asked questions
How much is £45,000 a year after tax in 2026/27?
A £45,000 salary in England, Wales or Northern Ireland gives take-home pay of about £35,920 a year, or roughly £2,993 a month — after £6,486 Income Tax and £2,594 National Insurance, assuming no pension or student loan deductions.
How is take-home pay calculated?
Start with your gross salary, subtract the £12,570 personal allowance to find your taxable income, then apply the Income Tax bands. National Insurance is charged separately on earnings above £12,570. Pension contributions and student loan repayments are then deducted, and what is left is your take-home pay.
What is the personal allowance for 2026/27?
The standard personal allowance is £12,570. It is reduced by £1 for every £2 you earn over £100,000 and disappears entirely once income reaches £125,140.
How much National Insurance will I pay?
Employees pay 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. No National Insurance is due once you are over State Pension age.
Is take-home pay different in Scotland?
Yes. Scotland sets its own Income Tax bands (19% to 48%), so take-home pay differs from the rest of the UK. National Insurance is the same UK-wide. Choose Scotland in the calculator to see Scottish figures.
What is the 60% tax trap?
Between £100,000 and £125,140, the personal allowance is gradually withdrawn. An extra £1 of salary is taxed at 40% and also removes 50p of allowance, creating an effective marginal rate of around 60% on income in that band.