Most people know their salary. Far fewer know what they actually take home after the government has had its share. If you have ever looked at your payslip and wondered where your money went, this guide breaks it down in plain English.
Gross pay vs net pay — what is the difference?
Gross pay is your salary before any deductions. It is the number in your contract, the figure you quote when someone asks what you earn, and the starting point for all the calculations below.
Net pay is what actually lands in your bank account. After income tax, National Insurance, pension contributions and any student loan repayments have been taken off, what remains is your take home pay.
The gap between the two surprises a lot of people. On a £35,000 salary you might expect to take home around £2,900 a month. You actually take home closer to £2,300. Understanding why is the first step to understanding your finances.
What gets deducted from your pay?
There are two deductions everyone pays, one most people pay, and two that depend on your situation.
1. Income tax
Income tax in the UK works in bands. You do not pay the same rate on every pound you earn — you pay different rates on different portions of your income. For 2025/26 the bands are:
| Income band | Tax rate | What this means |
|---|---|---|
| Up to £12,570 | 0% | Personal allowance — completely tax free |
| £12,571 to £50,270 | 20% | Basic rate — most employees pay this |
| £50,271 to £125,140 | 40% | Higher rate — for higher earners |
| Above £125,140 | 45% | Additional rate |
The personal allowance of £12,570 means the first £12,570 you earn each year is completely free of income tax. This is why someone earning £13,000 pays very little tax — only £430 of their income sits in the taxable band.
One important point — if you earn over £100,000 your personal allowance starts to reduce. It goes down by £1 for every £2 you earn above £100,000 and disappears entirely at £125,140. This creates an effective 60% tax rate on earnings between £100,000 and £125,140, which catches many people off guard.
2. National Insurance
National Insurance is a separate contribution on top of income tax. It funds the state pension, the NHS and certain benefits. For employees in 2025/26 the rates are:
| Earnings band | NI rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 to £50,270 | 8% |
| Above £50,270 | 2% |
National Insurance is calculated weekly or monthly by your employer rather than annually, which can occasionally produce slightly different results from an annual calculation.
3. Pension contributions
If you are enrolled in a workplace pension — which is now automatic for most employees — a percentage of your salary goes in each month. The minimum under auto enrolment is 5% from you and 3% from your employer, though many employers contribute more.
Pension contributions reduce your take home pay but increase your overall wealth, so they are worth thinking of separately from tax. With salary sacrifice pension arrangements your contributions come off before tax is calculated, which reduces your tax and National Insurance bill too.
4. Student loan repayments
If you have a student loan you repay a percentage of your earnings above a threshold, automatically through payroll. The threshold and rate depend on your plan:
| Plan | Repayment threshold | Rate above threshold |
|---|---|---|
| Plan 1 (before Sept 2012) | £24,990/yr | 9% |
| Plan 2 (Sept 2012 to July 2023) | £27,295/yr | 9% |
| Plan 5 (Aug 2023 onwards) | £25,000/yr | 9% |
| Postgraduate loan | £21,000/yr | 6% |
Real examples — what do you actually take home?
£25,000 salary — take home pay
£35,000 salary — take home pay
£50,000 salary — take home pay
£75,000 salary — take home pay
What is an effective tax rate?
Your effective tax rate is the percentage of your total income that goes in tax and National Insurance combined. It is almost always lower than your marginal rate because the lower bands apply to the first portion of your income.
On a £35,000 salary for example, your marginal rate is 20% plus 8% National Insurance — a combined 28% on your last pound earned. But your effective rate across your whole salary is closer to 18%, because a significant chunk of your income sits in the tax free personal allowance band.
Key takeaway: Your tax code, pension type and student loan plan all affect your exact take home figure. The only way to get a precise number is to calculate it with your specific details included.
Calculate your exact take home pay
Enter your salary, tax code, pension and student loan details to get a precise figure — including a full breakdown of every deduction.
Calculate my take home pay →Why does my take home pay vary month to month?
Several things can cause your monthly net pay to fluctuate even when your salary stays the same. Bonus payments are taxed in the month they are paid, which can push you into a higher band temporarily. Backdated pay rises create a similar effect. Changes to your pension contribution percentage, a new student loan threshold kicking in, or an updated tax code from HMRC can all change your monthly net figure without your gross salary moving at all.
If your take home pay changes unexpectedly, the first thing to check is your payslip — specifically your tax code and the deductions listed. If your tax code has changed and you do not know why, contact HMRC directly.
Scotland — different income tax rates
Scottish taxpayers pay income tax at rates set by the Scottish Government rather than Westminster. Scotland has more bands than the rest of the UK, with a starter rate of 19% and rates going up to 48% for the highest earners. If you live in Scotland your take home pay will differ from the figures above — use our calculator and select Scotland for an accurate result.