The salary in your job offer is not the money that reaches your bank. Two deductions come off almost everyone's pay first: income tax and National Insurance. Here is exactly how they work for 2026/27, with a worked example, so your payslip stops being a mystery.
Your gross salary is the headline figure, for example £35,000 a year. Your take-home pay (also called net pay) is what actually lands after deductions. For most employees the deductions are, in order:
This guide focuses on the two that apply to nearly everyone: income tax and National Insurance. Pension and student loan are covered at the end.
Everyone gets a personal allowance of £12,570 that is completely tax-free. Above that, your income is taxed in bands. For England, Wales and Northern Ireland:
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Only the slice of income inside each band is taxed at that band's rate. Earning £1 into the higher-rate band does not tax your whole salary at 40%, just that £1.
One catch for high earners: once you earn over £100,000, your personal allowance is withdrawn by £1 for every £2 above £100,000, and it is gone completely at £125,140. That creates the "60% trap", explained below.
Live in Scotland? Scotland sets its own income tax bands (19%, 20%, 21%, 42%, 45% and 48% for 2026/27). National Insurance is the same across the UK. See the full 2026/27 tax rates for every figure.
Employees pay Class 1 National Insurance on their earnings. For 2026/27 the rates are:
National Insurance is worked out on each pay packet rather than annually, but over a full year with a steady salary the result is the same as applying these rates to your yearly pay.
Take a £35,000 salary in England, with no pension contribution or student loan. Here is how the two deductions land.
Income tax. The first £12,570 is tax-free. That leaves £22,430 taxed at the 20% basic rate, which is £4,486.
National Insurance. The first £12,570 is free. The remaining £22,430 is charged at 8%, which is £1,794.
£35,000 salary, minus £4,486 income tax, minus £1,794 National Insurance
= £28,720 take-home a year, or about £2,393 a month.
You keep roughly 82% of your salary.
Enter your salary and see income tax, National Insurance, pension and student loan, updated live for 2026/27. England, Wales, NI and Scotland.
Open the Take-Home Pay calculator →Between £100,000 and £125,140 your personal allowance is withdrawn by £1 for every £2 you earn. Because you lose tax-free allowance and pay 40% on the extra income at the same time, each additional £1 in this band effectively costs about 60% (around 62% once National Insurance is included). It is one of the quirks of the UK system, and the reason many people in this band pay into a pension to bring their income back below £100,000.
You cannot avoid income tax and National Insurance on ordinary pay, but a few things genuinely change the maths:
About £28,720 a year, or roughly £2,393 a month, in England, Wales or Northern Ireland with no pension contribution or student loan. That is £4,486 income tax and £1,794 National Insurance.
£12,570. You pay no income tax on the first £12,570 you earn. It tapers away above £100,000 and is gone at £125,140.
8% on earnings between £12,570 and £50,270, then 2% above £50,270, for 2026/27.
Yes. Through salary sacrifice they lower the pay your income tax and National Insurance are worked out on, so you pay less of both.
Yes, Scotland has its own bands (19% to 48% for 2026/27). National Insurance is the same UK-wide.
Illustrative and educational only, not financial or tax advice. Figures are for the 2026/27 UK tax year and assume the standard personal allowance and tax code, with no other income or allowances. Tax depends on your circumstances and can change. Always check gov.uk or speak to a qualified adviser.