What is the UK Personal Allowance for 2025/26?

The UK Personal Allowance for 2025/26 is £12,570, meaning the first £12,570 of your annual earnings is free from income tax. The allowance is reduced by £1 for every £2 earned above £100,000, and disappears entirely at income above £125,140. Scottish residents are subject to different income tax rates and bands set by the Scottish Parliament, though the UK-wide Personal Allowance still applies.

How much National Insurance do employees pay in the UK?

From April 2024, employees pay National Insurance Class 1 contributions at 8% on earnings between the Primary Threshold (£12,570 per year) and the Upper Earnings Limit (£50,270 per year). Earnings above £50,270 are subject to a reduced NIC rate of 2%. These rates were reduced from 10% and 12% respectively following the January 2024 and April 2024 government cuts, saving average earners approximately £450 per year.

Does pension contribution reduce UK income tax?

Yes. Contributions to a workplace pension under a salary sacrifice scheme reduce your gross pay before tax and NIC are calculated, providing full tax and NIC relief. If you contribute to a personal pension outside salary sacrifice, you receive tax relief at your marginal rate (20% for basic rate taxpayers, claimed automatically; 40% or 45% claimable via self-assessment). Pension contributions do not affect the National Insurance calculation for non-salary sacrifice arrangements.

Do UK employers also pay National Insurance?

Yes, employers pay Employer National Insurance Contributions (Employer NIC) at 13.8% on employee earnings above the Secondary Threshold, which is £9,100 per year from April 2025. This is a cost to the employer and does not appear on an employee's payslip, but it is a significant factor in total employment costs. The Employer NIC rate increased from 13.8% as announced in the October 2024 Autumn Budget.

Salary Calculator (In-hand & Take home) for UK

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Salary Calculator (In-hand & Take home) — UK

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Frequently Asked Questions

How is take-home pay calculated in the UK?

Take-home pay is your gross salary minus Income Tax (applied after your Personal Allowance), National Insurance contributions, and any pension or student loan deductions. The UK uses PAYE (Pay As You Earn) so tax is deducted at source by your employer.

What is the Personal Allowance in the UK?

The Personal Allowance is the amount you can earn tax-free each year — £12,570 for 2024/25. It tapers by £1 for every £2 earned above £100,000 and is completely removed at income over £125,140.

What are the UK income tax bands for 2024/25?

After the Personal Allowance (£12,570), income up to £50,270 is taxed at 20% (Basic Rate), £50,271–£125,140 at 40% (Higher Rate), and above £125,140 at 45% (Additional Rate). Scotland has its own slightly different bands.

What is National Insurance and how much do I pay?

National Insurance (NI) contributions fund state benefits and pensions. Employees pay 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270 (Class 1 rates for 2024/25).

What is the difference between gross and net salary in the UK?

Gross salary is your total pay before any deductions. Net salary (take-home pay) is what you receive after Income Tax, National Insurance, pension contributions, and any other deductions such as student loan repayments are subtracted.

How accurate is this UK salary calculator?

This calculator uses 2024/25 HMRC tax bands and NI thresholds to give a solid estimate. Your actual take-home may vary depending on your tax code, pension auto-enrolment contributions, student loan plan, and any benefits in kind.