If you've ever looked at your payslip and wondered "what is my take home pay?" you're not alone. Understanding the difference between your gross salary and what actually lands in your bank account is crucial for budgeting, financial planning, and making informed career decisions. This comprehensive guide explains everything you need to know about take home pay in the UK.
What Is Take Home Pay?
Take home pay (also called net pay or net salary) is the amount of money you receive in your bank account after all deductions have been made from your gross salary. It's the money you actually "take home" to spend on bills, savings, and everyday life.
Your gross salary is the headline figure on your job offer or contract - but it's not what you'll receive. Various mandatory and voluntary deductions reduce your gross pay to arrive at your net pay.
Use our free Take Home Pay Calculator to instantly see your exact take home pay based on your salary and personal circumstances.
The Key Deductions That Affect Your Take Home Pay
1. Income Tax
Income Tax is the largest deduction for most employees. The UK uses a progressive tax system with different tax bands:
| Tax Band | Income Range (2025/26) | Tax Rate |
|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Your Personal Allowance of £12,570 is the amount you can earn tax-free. This allowance reduces by £1 for every £2 you earn over £100,000, meaning it disappears entirely at £125,140.
Scotland has different tax rates if you're a Scottish taxpayer, with starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%), and top (48%) rates.
2. National Insurance Contributions
National Insurance (NI) is a separate deduction that funds state benefits and the NHS. For employees in 2025/26:
| Earnings | NI Rate |
|---|---|
| Up to £12,570 per year | 0% |
| £12,570 - £50,270 per year | 8% |
| Over £50,270 per year | 2% |
NI is calculated differently from income tax - it's based on your earnings in each pay period rather than annually, which can affect people with variable income.
3. Pension Contributions
If you're enrolled in a workplace pension (which is automatic for most employees), contributions are deducted from your pay. The minimum under auto-enrolment is:
- Employee contribution: 5% of qualifying earnings
- Employer contribution: 3% of qualifying earnings
Many people contribute more than the minimum. Pension contributions usually receive tax relief, meaning they come from your pre-tax salary.
4. Student Loan Repayments
If you have a student loan, repayments are deducted through PAYE once you earn above the threshold:
| Plan | Threshold (2025/26) | Rate |
|---|---|---|
| Plan 1 | £24,990 | 9% |
| Plan 2 | £27,295 | 9% |
| Plan 4 | £31,395 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
You only repay 9% (or 6% for postgraduate) of earnings above the threshold - not your entire salary.
How to Calculate Your Take Home Pay
Here's a simplified formula:
Take Home Pay = Gross Salary - Income Tax - National Insurance - Pension - Student Loan - Other Deductions
Example Calculation: £35,000 Salary
Let's calculate take home pay for someone earning £35,000 with a Plan 2 student loan and 5% pension contribution:
Gross Annual Salary: £35,000
Income Tax: - £12,570 at 0% = £0 - £22,430 at 20% = £4,486 - Total Tax: £4,486
National Insurance: - £12,570 at 0% = £0 - £22,430 at 8% = £1,794 - Total NI: £1,794
Pension (5% of qualifying earnings):
- 5% of £28,770 = £1,439
Student Loan (Plan 2):
- 9% of (£35,000 - £27,295) = £694
Annual Take Home: £35,000 - £4,486 - £1,794 - £1,439 - £694 = £26,587
Monthly Take Home: £2,216
Use our Take Home Pay Calculator for instant, accurate calculations tailored to your situation.
Year-to-Date (YTD) Figures on Your Payslip
Your payslip shows YTD figures - cumulative amounts since 6th April (the start of the tax year):
- Total gross pay earned
- Total tax paid
- Total NI paid
- Total pension contributions
These figures help you track your annual progress and check if your tax code is working correctly.
Factors That Can Change Your Take Home Pay
Several factors can affect how much you actually take home:
Tax Code Changes
Your tax code tells your employer how much tax to deduct. Common codes include:
- 1257L - Standard code for 2025/26 (full Personal Allowance)
- BR - Basic rate tax on all income (emergency code)
- 0T - No allowances, tax on all income
If your code is wrong, you'll pay too much or too little tax. Check your code on your payslip and use our tax code calculator to verify it's correct.
Salary Sacrifice
Salary sacrifice schemes let you exchange salary for benefits (like additional pension contributions or childcare vouchers) before tax and NI are calculated, increasing your take home pay relative to contributing after tax.
Student Loan Plan Type
Different student loan plans have different thresholds. If you're on the wrong plan, you could be overpaying. Check your payslip shows the correct plan.
Scotland vs England Tax Rates
Scottish taxpayers pay different rates of income tax. Scotland has six bands compared to England's three, which can significantly affect take home pay.
How to Increase Your Take Home Pay
While you can't avoid tax and NI entirely, you can optimize your situation:
1. Check Your Tax Code
An incorrect tax code is one of the most common reasons for paying too much tax. If you've been on an emergency code (BR, 0T, or W1/M1), you're likely overpaying.
2. Claim Tax Reliefs
You might be entitled to:
- Working from home allowance (£6 per week)
- Professional fees (subscriptions needed for your job)
- Uniform and tools (if you buy your own)
3. Optimize Pension Contributions
Pension contributions receive tax relief at your highest rate. If you're a higher rate taxpayer, you get 40% relief on contributions, significantly boosting your retirement savings.
4. Use Salary Sacrifice
If your employer offers salary sacrifice, you can save both tax and National Insurance on benefits like pensions and childcare vouchers.
5. Consider Contracting/Freelancing
Self-employed individuals can claim business expenses against their income, potentially reducing their tax bill. However, this comes with additional responsibilities and risks.
Take Home Pay by Salary (2025/26 Examples)
Here's what typical take home pay looks like at different salary levels (assuming no student loan, standard tax code, 5% pension):
| Gross Salary | Annual Take Home | Monthly Take Home |
|---|---|---|
| £20,000 | £17,163 | £1,430 |
| £25,000 | £20,975 | £1,748 |
| £30,000 | £24,787 | £2,066 |
| £35,000 | £28,349 | £2,362 |
| £40,000 | £31,911 | £2,659 |
| £50,000 | £38,347 | £3,196 |
| £60,000 | £44,347 | £3,696 |
| £75,000 | £53,783 | £4,482 |
| £100,000 | £68,283 | £5,690 |
Note: These are estimates. Your actual take home depends on your specific circumstances.
Related Calculators and Resources
- Take Home Pay Calculator - Calculate your exact net salary
- Tax Code Calculator - Check if your tax code is correct
- Salary Comparison Calculator - Compare job offers
- Student Loan Calculator - See your repayment amounts
- Pension Calculator - Optimize your contributions
- Tax Bands Guide - Understand UK tax rates
- National Insurance Guide - Learn about NI contributions
Summary
Understanding your take home pay is essential for financial planning. The key factors affecting your net salary are:
- Income Tax (0-45% depending on earnings)
- National Insurance (0-8% for most earnings)
- Pension contributions (typically 5% minimum)
- Student loan repayments (9% above threshold if applicable)
Your take home pay will be roughly 75-80% of your gross salary for basic rate taxpayers, falling to 60-65% for higher rate taxpayers once you account for all deductions.
The easiest way to find your exact take home pay is to use our free Take Home Pay Calculator, which accounts for all deductions including your specific tax code, student loan plan, and pension contributions.