To calculate net salary, select your salary type, enter the salary and click on the Calculate Net Pay button. You’ll see your take-home pay after deducting income tax and NI contributions, as well as other time-frame salaries.
UK Tax Breakdown & Personal Allowance
The personal allowance, set at £12,570, is free from taxation. Income over £12,571 and up to £50,270 is taxed at 20%, while income between £50,271 and £125,140 is taxed at 40%. Any income over £125,140 is taxed at a rate of 45%.
| Band | Taxable Income | Tax 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% |
Income Tax Calculation
It’s very simple, assume you earn £60,000 per year, and remember you are not paying tax on 40% of the entire amount. The tax details are as follows:
- Personal Allowance: £12,570, which is tax-free, you don’t need to pay tax.
- Taxable Amount: £50,270 – £12,570 = £37,700, (This is a 20% taxable amount)
- Tax (20%): = £37,700 × 0.2 (20%) = £7,540
- Taxable Amount: £60,000 – £50,270 = £9,730, (This is a 40% taxable amount)
- Tax (40%): = £9,730 × 0.4 (40%) = £3,892
So, if you earn £60,000 a year, you pay income tax of £7,540 + £3,892 = £11,432.00.
National Insurance (NI) Contribution
You are exempt from tax and National Insurance contributions if your gross income is less than £12,570 per year. However, if your earnings are between £12,570 and £50,270 per year, a 10% fee applies. If the income exceeds £50,270 per year, a 2% fee is charged.
| Monthly | Yearly | Rate |
|---|---|---|
| £123 to £1,048 | £1476.00 to £12570.00 | 0% |
| £1,048 to £4,189 | £12570.00 to £50270.00 | 10% |
| Over £4,189 | Over £50270.00 | 2% |
Student Loan Repayment
You have to repay the loan against any one of the 5 specific plans. These plans and their annual threshold vary for each plan.
The loan repayment rate for all 4 plans is 9%, but the postgraduate loan is 6%. How much you pay when you start repaying your loan depends on which repayment plan you are on.
| Plan Type | Threshold | Rate |
|---|---|---|
| Plan 1 | £22,015 | 9% |
| Plan 2 | £27,295 | 9% |
| Plan 4 | £27,660 | 9% |
| Plan 5 | £25,000 | 9% |
| Post Graduate Loan | £21,000 | 6% |
How to Calculate Net Salary?
In the UK and other countries, you get paid as a gross amount on an annual, monthly, weekly or hourly. So, subtract all tax and NI contributions when you calculate your net salary.
Assuming, you earn £75,000 a year, your net salary or take-home pay would be £53,303.40, which equates to £4,441.95 monthly. The amount of £21,696.60 (£75,000.00 – £53,303.40 = £21,696.60) is a combination of income tax and NI contributions which are deducted from your gross salary.
Take Home Pay Calculation
For example – if we earn £85,000 per year, the take-home pay would be calculated as:
Income Tax:
- Personal allowance: £12,570 (tax-free)
- 20% tax: £50,270 – £12,570 = £37,700 × 0.2 = £7,540 (tax)
- 40% tax: £85,000 – £50,270 = £34,730 × 0.4 = £13,892 (tax)
Total tax is £7,540 + £13,892 = £21,432
NI Contribution:
- NI Contribution on annual earnings £12,570: Free
- 10% NI Contribution: £3,770 (£50270 – £12,570 = £37,700 × 0.1 = £3,770)
- 2% NI Contribution: £694.60 (£85,000 – £50,270 = £34730 × 0.02 = £694.60)
Total NI contribution is £3,770 + £694.60 = £4,464.6
Take Home Pay: When you pay £21,432 in income tax and £4,464.6 in NI contributions on your earnings of £85,000 per year, the take-home pay would be £85,000 – (£21,432 + £4,464.6) = £59,103.40.
Frequently Asked Questions
Income tax rates in the UK vary depending on your income. For tax year 2023-24, the basic income tax rates are as follows:
20% on income between £12,571 and £50,270
40% on income between £50,271 and £150,000
45% on income over £150,000
A National Insurance contribution is a payment made by employees to receive various state benefits such as state pension, unemployment benefits, sick pay etc. The amount of NICs depends on your income and employment status.
National Insurance contributions are calculated as a percentage of your earnings up to a certain limit. For employees, they must pay 10% between earnings of £12,570 and £50,270 and 2% on earnings above this range.
Note: This take-home pay calculator is based on the UK tax year 2023-24 and will be updated when any changes to tax rates are officially announced