Pay Rise Real-Terms Calculator
A pay rise sounds good until inflation takes its cut. Enter your current and new salary (or just the rise %) against the current CPI rate to see whether your rise is a genuine gain — or a real-terms pay cut in disguise.
Estimate only. This calculator gives estimates for information only, not financial advice. CPI inflation varies and the default rate is illustrative — check the current ONS figure.
This is a real-terms pay cut
Your nominal rise of 3% doesn't keep up with 3.2% inflation — in real terms, your buying power has fallen by 0.2%.
If your rise stays at 3% every year while CPI holds at 3.2%, here's what your salary is really worth in today's money:
| Year | Nominal salary | Real value (today's money) |
|---|---|---|
| 1 | £30,900 | £29,942 |
| 2 | £31,827 | £29,884 |
| 3 | £32,782 | £29,826 |
| 4 | £33,765 | £29,768 |
| 5 | £34,778 | £29,710 |
- Benchmark your salary against the market before the conversation, not during it — walking in with a number is far stronger than reacting to whatever's offered.
- Ask explicitly for a rise at "CPI plus" a real increase, not just "in line with inflation" — the latter is only a real-terms freeze, not a gain.
- A one-off bonus is not a pay rise — it doesn't compound into next year's base salary or your pension contributions, so don't let it substitute for one.
- If a rise pushes you over £50,270 or £100,000, check the marginal-rate impact before agreeing — sometimes a slightly smaller rise plus a pension top-up leaves you better off overall.
Why "real terms" matters more than the headline %
A 3% pay rise feels like progress, but if prices have risen by more than 3% over the same period, you can actually buy less than you could before — a real-terms cut, even though the number on your payslip has gone up. This calculator uses the standard "real rise = nominal rise − CPI inflation" method used across UK pay reporting, then checks what the rise is actually worth in your pocket after Income Tax and National Insurance using the same verified tax engine as the rest of this site. It also flags if your rise pushes you across a tax threshold, where the extra pay is taxed more heavily than the rest.