There's the salary on your contract, and then there's what actually lands in your account. The gap can run to thousands of pounds, and it's down to a small queue of deductions helping themselves before you get a look in. Knowing who takes what puts you back in charge: you can plan properly, ask for that rise with a straight face, and make the most of tax-friendly moves like pension contributions and salary sacrifice.
This guide walks through every step of the sum for England, Wales and Northern Ireland (rUK) in 2026/27. Scotland sets its own income tax rates, so if that's you, head to our Scottish income tax guide.
1. Start with your personal allowance
The personal allowance is the slice you can earn before income tax gets involved. For 2026/27 it stays at £12,570, frozen at that level until April 2031.
Earn over £100,000 and the allowance starts to erode. For every £2 you make above £100,000 you lose £1 of allowance, and by £125,140 it's vanished completely.
| Your income | Personal allowance |
|---|---|
| Up to £100,000 | £12,570 |
| £110,000 | £7,570 |
| £120,000 | £2,570 |
| £125,140 or more | £0 |
Not financial advice. This guide uses 2026/27 rates from HMRC and is for general information only. Your own position depends on your circumstances. Source: gov.uk/income-tax-rates.
2. Income tax bands (England, Wales and Northern Ireland)
Once you're past the personal allowance, income tax kicks in by bands:
| Band | Gross 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% |
Tax is worked out on the slices of income that fall in each band, not as one flat percentage across everything you earn. It's a common myth, and a costly one to believe.
Example: here's the income tax on a £50,000 gross salary, worked out slice by slice:
| Slice of income | Amount | Rate | Tax |
|---|---|---|---|
| Up to £12,570 | £12,570 | 0% | £0 |
| £12,571 to £50,000 | £37,430 | 20% | £7,486 |
| Total income tax | £7,486 |
Wales matches England for 2026/27 (the Welsh Government sets the Welsh Rate of Income Tax to keep them in step). Northern Ireland uses the UK rates too, since income tax isn't devolved there.
3. National Insurance
National Insurance is a separate deduction. It isn't income tax, however much they both sting. For employees (Class 1, Category A), the 2026/27 rates are:
| Earnings | Rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,571 to £50,270 (Upper Earnings Limit) | 8% |
| Above £50,270 | 2% |
NI is charged on your gross earnings (not taxable income), and it doesn't get tapered above £100,000 the way the personal allowance does.
Example: the same £50,000 salary, this time for National Insurance. Since £50,000 sits just under the £50,270 Upper Earnings Limit, it's all charged at the 8% main rate:
| Slice of earnings | Amount | Rate | NI |
|---|---|---|---|
| Up to £12,570 | £12,570 | 0% | £0 |
| £12,571 to £50,000 | £37,430 | 8% | £2,994.40 |
| Total NI | £2,994.40 |
Earn above the £50,270 limit and the slice over it is charged at 2% instead of 8%. On a £60,000 salary, for instance, that's 8% on the £37,700 up to the limit (£3,016) plus 2% on the £9,730 above it (£194.60), which comes to £3,210.60.
Source: gov.uk rates and thresholds for employers 2026-to-2027.
4. Pension contributions
Pension contributions trim your net pay, but they hand you tax relief in return. How that relief reaches you depends on the method:
| Method | How it works | Basic-rate cost of £100 contribution |
|---|---|---|
| Relief at source | You pay 80%; provider claims 20% from HMRC | £80 net |
| Net pay | Contribution deducted before tax is calculated | £80 net (saving made via reduced tax) |
| Salary sacrifice | Gross salary reduced; saves income tax and NI | ~£69 net (saves NI too) |
Higher-rate and additional-rate taxpayers can claim back extra relief through Self Assessment on relief-at-source pensions, and plenty forget to.
The annual allowance for 2026/27 is £60,000 (or 100% of your earnings, whichever is lower).
5. Student loan repayments
Student loan repayments come off your gross pay once you earn above your plan's threshold:
| Plan | 2026/27 threshold | Rate |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Repayments apply only to income above the threshold, not your whole salary. They sit alongside income tax and NI as their own separate deduction.
Source: gov.uk student loans terms 2026-to-2027.
6. Worked examples (2026/27, England)
These are checked against published HMRC rates:
| Gross salary | Income tax | Employee NI | Take-home |
|---|---|---|---|
| £25,000 | £2,486 | £994.40 | £21,519.60 |
| £30,000 | £3,486 | £1,394.40 | £25,119.60 |
| £50,000 | £7,486 | £2,994.40 | £39,519.60 |
| £60,000 | £11,432 | £3,210.60 | £45,357.40 |
| £100,000 | £27,432 | £4,010.60 | £68,557.40 |
Assumes: tax code 1257L, no student loan, no pension contribution, Category A NI.
At £60,000+ you cross into the higher-rate (40%) band, so every extra pound of gross pay hands over 40p in income tax plus 2p in NI, a marginal rate of 42%. Between £100,001 and £125,140 it gets worse: the personal allowance taper pushes the effective marginal rate to around 60%.
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Enter your salary to see an exact breakdown of income tax, NI, pension and student loan deductions, updated for 2026/27.
7. Salary sacrifice and other deductions
Plenty of employers offer salary sacrifice schemes. You agree to a lower gross salary in return for a non-cash benefit (usually pension, an electric vehicle, cycle to work, or childcare). Because your gross salary drops, you pay less income tax and less National Insurance. For most employees it's the most tax-efficient way to pay into a pension.
Note: from 6 April 2029, salary sacrifice pension contributions above £2,000 a year will start attracting NI. That's a 2029 problem, though, and doesn't touch the 2026/27 tax year.
Other lines that might crop up on your payslip:
| Payslip line | What it does to your pay |
|---|---|
| Benefits in kind (company car, private medical) | Push your taxable pay up |
| Cycle-to-work and childcare vouchers | Reduce gross salary under salary sacrifice |
| Season ticket loan | Not a tax deduction, but lightens your net pay each month |
Related guides
- Scottish income tax explained (2026/27 bands): Scotland runs six different SRIT bands
- Pension tax relief explained: how relief at source, net pay and salary sacrifice stack up
- ISA vs savings account: where to park the money you save on tax