How UK salary tax works in 2025/26
UK employees pay two deductions on their salary before any other adjustments: income tax and National Insurance. Your employer withholds both through PAYE (Pay As You Earn) each pay period and sends them to HMRC on your behalf, alongside any student loan repayment and your pension contribution.
For 2025/26, the basic personal allowance is £12,570 — the first pound you earn above that is taxed. If you live in Scotland, different income tax rates apply (we'll launch a separate Scottish salary calculator). Everything on this page uses the rates for England, Wales and Northern Ireland.
Income tax bands for 2025/26 (England, Wales and NI)
| Band | Salary range | 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% |
Your personal allowance tapers by £1 for every £2 of salary over £100,000, which means you lose all of it between £100,000 and £125,140. That creates an effective 60% marginal tax rate in that band — higher than the Additional Rate itself.
Employee National Insurance
Class 1 Employee NI for 2025/26 has two rates and no progressive increase at the top — the rate actually drops above the upper earnings limit:
| Band | Salary range | Rate |
|---|---|---|
| Primary threshold | Up to £12,570 | 0% |
| Main rate | £12,571 – £50,270 | 8% |
| Upper rate | Over £50,270 | 2% |
The 2% rate above the upper earnings limit exists because Class 1 NI was originally designed to fund state benefits, which have a cap on the credits you can earn — so the rate taper above £50,270 reflects that.
Student loan deductions
Your deductions depend on which plan your loan sits under. The thresholds for 2025/26 are:
| Plan | Threshold | Rate | Who it applies to |
|---|---|---|---|
| Plan 1 | £26,065 | 9% | Started uni in England or NI before 1 Sep 2012, or in Scotland before 1 Sep 1998 |
| Plan 2 | £28,470 | 9% | Started uni in England or Wales on or after 1 Sep 2012 |
| Plan 4 | £32,745 | 9% | Scottish students from 2007 onwards |
| Plan 5 | £25,000 | 9% | Started uni in England on or after 1 Aug 2023 |
| Postgraduate | £21,000 | 6% | Postgraduate loan for Masters or Doctoral study |
If you have both an undergraduate and a postgraduate loan, both are deducted at the same time — so someone on £40,000 with a Plan 2 and Postgrad loan pays 9% on the amount above £28,470 and 6% on the amount above £21,000, giving a combined deduction rate of up to 15% in the overlap band.
A £45,000 salary with a Plan 2 student loan and 5% pension contribution: £6,486 income tax, £2,594 employee NI, £1,488 student loan, £2,250 pension — a net take-home of £32,182, or £2,682/month.— GoForma technical team, 2025/26 tax year modelling
Pension contributions and tax relief
How your pension affects your take-home depends on the scheme type:
- Relief at source (most personal pensions) — you pay from net income and the provider grosses up your contribution by 20% (e.g. you pay £80, it becomes £100 in the pot). Higher- and additional-rate taxpayers claim the extra 20% / 25% through Self Assessment.
- Net pay arrangement — your contribution comes out of gross salary before tax is calculated. You see the relief automatically in your payslip, no Self Assessment claim needed.
- Salary sacrifice — you give up part of your contractual salary in exchange for employer pension contributions. Saves employee AND employer NI, plus full income tax relief at marginal rate. Usually the most tax-efficient option if your employer offers it.
This calculator models relief-at-source (the default personal pension treatment). For net-pay or salary-sacrifice schemes, taxable salary is reduced — your actual take-home will be slightly higher than shown.
When to check your tax code
HMRC assigns a tax code that tells your employer how much tax-free pay to give you each month. For most people on a single job with no adjustments, that's 1257L — representing the £12,570 personal allowance divided into monthly portions. Codes worth checking:
- K codes — you owe HMRC money (usually from untaxed benefits or prior-year underpayments). Tax is added, not subtracted.
- BR, D0, D1 — all income taxed at basic, higher or additional rate respectively. Usually applied to a second job where your allowance is used on the first.
- Week 1 / Month 1 — emergency code that ignores previous pay in the year. Often applied at the start of a new job until HMRC processes your P45.
If your monthly take-home is materially different from this calculator, check your tax code on your payslip or in your HMRC personal tax account — an incorrect code is the most common reason for the discrepancy.