How Income Tax and National Insurance Work
Income Tax is charged on your earnings above a tax-free threshold called the Personal Allowance — £12,570 in 2026/27. Earnings above that are taxed at 20% (the basic rate) up to £50,270, then 40% beyond that. Both rates apply only to the slice of income within each band, not your whole salary — so earning £51,000 doesn't mean everything is taxed at 40%, only the £730 above £50,270.
National Insurance (NI) is a separate deduction that funds the NHS, state pension, and certain benefits. Class 1 employee NI — the type deducted from a salary — starts at £12,584 a year, at 8% up to £50,270 and 2% above that. Because NI and Income Tax have different starting thresholds and different rates, the effect of a pay rise on your take-home is rarely as straightforward as it looks.
Both are collected automatically by your employer through PAYE before you receive your pay — the figure in your bank account is already after both deductions. To see exactly how this plays out at real salary levels, take a look at our worked examples for common salaries from £25k to £60k, or find out what minimum wage workers actually take home after tax in 2026/27.
Frequently Asked Questions
How do I calculate my take-home pay in the UK?
Subtract Income Tax and National Insurance from your gross salary. For 2026/27, Income Tax is 20% on earnings above the £12,570 personal allowance (up to £50,270) and 40% above that, while National Insurance is 8% on earnings between £12,584 and £50,270, and 2% above. Enter your salary above and this calculator does the maths for you, including any pension contributions.
What is the personal allowance for 2026/27?
The personal allowance for 2026/27 is £12,570 — the amount you can earn each year before paying any Income Tax. It shrinks by £1 for every £2 you earn above £100,000, and disappears completely once your income reaches £125,140.
How much tax will I pay on my salary?
It depends on how much you earn. In 2026/27 there's no Income Tax on the first £12,570, then 20% on income between £12,570 and £50,270, and 40% on anything from £50,270 up to £125,140. National Insurance is separate, charged at 8% between £12,584 and £50,270 and 2% above that. Enter your salary above to see your exact breakdown.
What's the difference between gross and net pay?
Gross pay is your salary before any deductions — the headline figure in your contract or job advert. Net pay, also called take-home pay, is what actually lands in your bank account after Income Tax, National Insurance, and any pension contributions have been deducted by your employer through PAYE.