How to Calculate UK Take-Home Pay (2025/26)

Your gross salary and your take-home pay can be surprisingly different. Here's exactly how to calculate what lands in your bank account after all deductions in 2025/26.

Step 1: Start With Gross Salary

Your gross salary is your salary before any deductions. Everything else is calculated from this number.

Step 2: Subtract the Personal Allowance

The first £12,570 of your income is tax-free (2025/26 Personal Allowance). This amount is frozen until at least 2028.

If you earn over £100,000, your personal allowance reduces by £1 for every £2 over that threshold — disappearing entirely at £125,140.

Step 3: Calculate Income Tax

Scottish residents pay different rates. Northern Ireland, Wales and England pay the same rates above.

Step 4: Calculate National Insurance (NI)

Employees pay Class 1 National Insurance:

• 0% on earnings up to £12,570/year
• 8% on earnings between £12,570 and £50,270/year
• 2% on earnings above £50,270/year

Step 5: Subtract Pension Contributions

If you're auto-enrolled, the minimum employee contribution is 5% of qualifying earnings (between £6,240 and £50,270). This reduces your taxable income if contributions go via salary sacrifice.

Real Example: £40,000 Salary

Ways to Increase Your Take-Home Pay

• Salary sacrifice — pay pension contributions before tax and NI, saving both
• Check your tax code — wrong codes (common) mean overpaying. Check on HMRC app or GOV.UK
• Claim WFH allowance — £6/week working from home claimable via HMRC (P87 form)
• Cycle to Work scheme — buy a bike tax-free through your employer