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How to Use the UK Tax Calculator
- Enter your annual gross salary — type your total yearly salary before any deductions. This is the figure on your employment contract or job offer.
- Select the tax year — choose 2025/26 or 2024/25 depending on which year you want to calculate. The calculator uses the correct HMRC rates for each year.
- Choose your student loan plan — if you have a student loan, select Plan 1, Plan 2, Plan 4, or Postgraduate. Each plan has a different repayment threshold and rate.
- Enter pension contribution — if your employer deducts a pension percentage from your gross pay, enter it here. Pension contributions reduce your taxable income.
- Toggle Scottish taxpayer — if you live in Scotland, enable this to use Scottish income tax bands, which have different rates and thresholds from the rest of the UK.
- Click "Calculate" — the calculator displays a full breakdown including income tax by band, National Insurance, student loan repayments, and your annual and monthly take-home pay.
How UK Income Tax Works
UK income tax is calculated in bands. You do not pay the higher rate on all your income — only on the portion that falls within each band. The personal allowance (£12,570 for 2025/26) is the amount you can earn completely tax-free. Income above the personal allowance is taxed at progressively higher rates as shown in the table below.
| Band | Taxable 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% |
National Insurance contributions are separate from income tax and are calculated on earnings above the primary threshold. For 2025/26, employees pay 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Student loan repayments are also deducted automatically if your income exceeds the relevant plan threshold. The personal allowance is reduced by £1 for every £2 of income above £100,000, creating an effective marginal rate of 60% in the £100,000 to £125,140 income range. This is one of the most commonly misunderstood aspects of UK taxation, and our calculator handles it automatically.
How is income tax calculated in the UK?
Income tax is charged in progressive bands. The first £12,570 of your income is tax-free under the personal allowance. Income from £12,571 to £50,270 is taxed at the basic rate of 20%. Income from £50,271 to £125,140 is taxed at the higher rate of 40%. Any income above £125,140 is taxed at the additional rate of 45%. Importantly, each rate only applies to income within its band, not to your entire salary.
What is the personal allowance for 2025/26?
The personal allowance for 2025/26 is £12,570. This is the amount you can earn before any income tax is due. However, if your income exceeds £100,000, the personal allowance is reduced by £1 for every £2 of income above that threshold. This means it disappears entirely once your income reaches £125,140, creating an effective 60% marginal tax rate in that income band.
How is National Insurance calculated?
Class 1 National Insurance for employees in 2025/26 is charged at 8% on earnings between £12,570 and £50,270, and at 2% on all earnings above £50,270. National Insurance is separate from income tax and funds state benefits including the State Pension and the NHS. Unlike income tax, NI does not have a personal allowance taper for higher earners.
What are the Scottish income tax rates?
Scottish taxpayers pay income tax at different rates set by the Scottish Parliament. For 2025/26, the rates are: Starter rate 19% (£12,571 to £14,876), Basic rate 20% (£14,877 to £26,561), Intermediate rate 21% (£26,562 to £43,662), Higher rate 42% (£43,663 to £75,000), Advanced rate 45% (£75,001 to £125,140), and Top rate 48% (over £125,140). National Insurance rates remain the same across the UK.
How do student loan repayments work?
Student loan repayments are deducted automatically once your income exceeds a plan-specific threshold. Plan 1 charges 9% on income above £24,990, Plan 2 charges 9% above £28,470, Plan 4 charges 9% above £32,745, and Postgraduate loans charge 6% above £21,000. If you have both an undergraduate and postgraduate loan, both repayments apply simultaneously.
What is the personal allowance taper?
The personal allowance taper reduces your tax-free allowance once your adjusted net income exceeds £100,000. For every £2 of income above £100,000, your personal allowance decreases by £1. This means the allowance is fully withdrawn at £125,140. The practical effect is a 60% marginal tax rate on income between £100,000 and £125,140, which is higher than the 45% additional rate. Our calculator handles this automatically.
Does pension contribution reduce my tax?
Yes. If you make pension contributions through salary sacrifice or a workplace pension scheme, the contribution is deducted from your gross salary before tax is calculated. This reduces your taxable income, meaning you pay less income tax and potentially less National Insurance. For example, a 5% pension contribution on a £40,000 salary reduces your taxable income by £2,000, saving you £400 in basic rate tax.
What's the difference between gross salary and take-home pay?
Gross salary is the headline number before any deductions. Take-home (net) pay is what actually arrives in your bank after income tax, National Insurance, student loan, pension contributions and any other payroll deductions. For a £42,000 salary with no loan and no pension, 2025/26 take-home is roughly £34,000.
How does the personal allowance taper work?
From £100,000, you lose £1 of the £12,570 personal allowance for every £2 earned above. By £125,140, the allowance is zero. This creates an effective 60% marginal rate on earnings between £100k and £125k — worth avoiding with pension contributions if possible.
Do Scottish taxpayers pay different National Insurance?
No. NI is reserved to the UK Parliament. Income tax rates and bands differ in Scotland (Holyrood sets them), but NI, student loan and UK-wide reliefs apply the same way north and south of the border.
Is student loan deduction tax?
Technically it's a loan repayment, not a tax — but it's collected via PAYE alongside tax and NI, so it reduces take-home just the same. Plan 2 deducts 9% of income above £28,470. The debt gets written off after 30 years regardless.
Does salary sacrifice pension save NI as well as tax?
Yes. By giving up gross salary in exchange for an employer pension contribution, you reduce both income tax and NI on the sacrificed amount — saving around 28% at the basic rate (20% + 8%) versus 20% from relief-at-source schemes.
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Worked Example: £42,000 Salary with Student Loan (Plan 2) and 5% Pension
Consider an English employee earning £42,000 gross with a Plan 2 student loan and a 5% auto-enrolment workplace pension. Here's how the 2025/26 figures work out.
The 5% pension contribution comes off the top before tax: £42,000 × 5% = £2,100. That leaves £39,900 as the taxable gross. The personal allowance of £12,570 is tax-free. Basic-rate income tax at 20% is charged on the next £27,330 (everything up to £39,900), giving £5,466 in income tax.
National Insurance for employees is 8% on earnings between £12,570 and £50,270. On a £42,000 salary, that's 8% of £29,430, or £2,354.40. Student loan Plan 2 deducts 9% of everything above £28,470: 9% of £13,530 = £1,217.70.
Take-home: £42,000 − £2,100 (pension) − £5,466 (tax) − £2,354 (NI) − £1,218 (loan) = £30,862 per year, or £2,572 per month. Without the pension, the tax bill rises (less relief) but the in-hand number would be slightly lower because of how the brackets interact.
Common Scenarios
Crossing £50,270. Above £50,270, the higher-rate band kicks in at 40%. NI drops to 2% above the same threshold — so a £5,000 raise from £50,000 to £55,000 doesn't actually cost you much more NI, but your tax rate on the top bit jumps from 20% to 40%.
The £100k personal allowance taper. Income between £100,000 and £125,140 removes £1 of personal allowance for every £2 earned, creating an effective 60% marginal rate. Pension contributions are the simplest way to bring income back under £100k.
Scottish taxpayers. Different bands (starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, top 48%) — set by Holyrood. NI, student loan and pension rules are UK-wide.
Salary sacrifice pensions. Sacrificing salary into pension saves both income tax and NI (unlike pension relief at source, which only saves tax). Over a 20-year career, the NI saving compounds noticeably.
Tax Band Comparison: 2023/24 → 2024/25 → 2025/26
| Band | 2023/24 | 2024/25 | 2025/26 |
|---|---|---|---|
| Personal allowance | £12,570 | £12,570 | £12,570 |
| Basic rate (20%) threshold | £50,270 | £50,270 | £50,270 |
| Higher rate (40%) starts | £50,271 | £50,271 | £50,271 |
| Additional rate (45%) starts | £125,140 | £125,140 | £125,140 |
| Employee NI main rate | 12%→10% (Jan '24) | 10%→8% (Apr '24) | 8% |
| NI upper earnings limit | £50,270 | £50,270 | £50,270 |
Thresholds are frozen until April 2028 — "fiscal drag" quietly pushes more workers into higher bands each year as wages rise.
Common Mistakes
The big one is forgetting that the personal allowance tapers away above £100,000 — that £125,140 notional threshold hides a 60% marginal rate that stings anyone near it and can be massively reduced with pension contributions. Another common error is assuming the higher rate applies to your whole salary once you cross £50,270; it only applies to the portion above. Student loan thresholds changed in April 2024 (Plan 2 frozen at £28,470, Plan 1 uprated) and many people still use the old numbers when budgeting. Scottish taxpayers sometimes forget that NI and student loan rules are UK-wide even though income tax bands are different. Finally, confusing salary sacrifice with relief-at-source pensions costs money: sacrifice saves NI too, relief at source doesn't.
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