Take Home Pay Explained: Tax, NI and Deductions for 2026/27

Your take home pay is your gross salary minus income tax, employee National Insurance, and any student loan, pension or other deductions. For 2026/27, someone in England earning £35,000 with a standard 1257L tax code and no pension or student loan takes home about £28,720 a year, or roughly £2,393 a month.

The exact figure on your payslip depends on where you live, your tax code, which student loan plan you're on and how your pension is set up. This guide explains each deduction in the order payroll applies them, with the official 2026/27 rates and worked examples, so you can check your own payslip line by line.

For a quick answer, our free take-home pay calculator works through every deduction for you, including Scottish rates, student loans and pension methods.

AI Automation for Accounting Firms, Explained Step by Step · 3:03 Subscribe

How take home pay is calculated

Payroll software works through your pay in roughly this order:

1. Start with gross pay for the period, including overtime, bonuses and taxable benefits paid through payroll.
2. Take off salary sacrifice amounts, if any. These reduce your pay before tax and National Insurance.
3. Take off net pay pension contributions, if your scheme uses that method. These reduce pay before income tax but not before National Insurance.
4. Work out income tax using your tax code and the bands for where you live.
5. Work out employee National Insurance on your earnings.
6. Work out student loan and postgraduate loan repayments, if you have them.
7. Take off relief at source pension contributions and any other after-tax deductions.

What's left is your take home pay.

Income tax bands for 2026/27

GOV.UK's income tax rates page confirms the current tax year runs from 6 April 2026 to 5 April 2027. For England, Wales and Northern Ireland:

Two points catch people out:

• Bands apply to slices of income, not the whole salary. Going into the higher rate only means the pounds above £50,270 are taxed at 40%.
• The Personal Allowance tapers away above £100,000. GOV.UK says your allowance goes down by £1 for every £2 of adjusted net income above £100,000, so it's zero at £125,140. In that range, each extra £1 of salary loses 40p in tax plus 20p because of the lost allowance, plus 2p of National Insurance. That's why pension contributions are popular with people earning just over £100,000.

Scottish income tax bands

If you live in Scotland, your non-savings income is taxed at Scottish rates. GOV.UK's Scottish income tax page lists these for 2026/27:

On a £35,000 salary, Scottish income tax comes to about £4,501, compared with £4,486 in the rest of the UK. The gap widens sharply once you reach the 42% band at £43,663. National Insurance thresholds are UK-wide, so they don't change in Scotland. Your tax code starts with an S if HMRC has you down as a Scottish taxpayer.

National Insurance for employees

Employees pay Class 1 National Insurance on earnings above the Primary Threshold. HMRC's 2026/27 rates and allowances give:

As an annual approximation, that's 8% on earnings between £12,570 and £50,270 and 2% above. National Insurance is worked out on each pay period separately, not over the whole year, so a big one-off bonus can push one month's NI up in a way that won't be refunded.

Your employer also pays 15% employer National Insurance above a Secondary Threshold of £96 a week. That doesn't come out of your pay, but it's part of what you cost your employer.

Student loan repayments

Repayments are a percentage of your income above your plan's threshold. From GOV.UK's student loan repayment page:

On £35,000 with a Plan 2 loan, that's 9% of £5,615, or about £505 a year. If you have a Postgraduate Loan as well as an undergraduate plan, you repay both at the same time.

Pension contributions: three methods

Your pension contribution rate is only half the story. The method your employer uses changes your take home pay:

GOV.UK's guidance on pension tax relief explains that with relief at source, your provider claims 20% basic rate relief from the government and adds it to your pot. If you pay 40% tax, you can claim extra relief through Self Assessment.

The same 5% pension, three ways

Take £35,000 in England, no student loan, with a 5% contribution (simplified here as 5% of the whole salary, £1,750):

Net pay and relief at source end up the same for a basic rate taxpayer. Salary sacrifice leaves more in your pocket because it also saves National Insurance. Many workplace schemes work out contributions on "qualifying earnings" rather than full salary, so check your scheme's basis.

Tax codes: what the letters mean

Your tax code tells your employer how much tax-free pay to give you. From GOV.UK's tax codes guide:

• 1257L is the most common code for people with one job or pension. The number reflects the £12,570 allowance, and L means the standard Personal Allowance.
• S at the start means Scottish rates; C means Welsh rates.
• BR, D0, D1 tax all income from that job at the basic, higher or additional rate, usually for a second job.
• 0T means no Personal Allowance from this job, often because your employer doesn't yet have your details.
• K means you have untaxed income or benefits bigger than your allowance.
• M and N relate to the Marriage Allowance.
• W1, M1, X or NONCUM are emergency codes. Tax is worked out on that period's pay alone, which can lead to too much or too little tax until it's corrected.

If your code looks wrong, contact HMRC. A wrong code is the most common reason a payslip doesn't match a calculator.

Take home pay at different salaries

For 2026/27, England, Wales and Northern Ireland, 1257L, no pension or student loan, using annual figures:

Your payslip may differ by a few pounds because National Insurance is calculated per pay period and payroll uses rounded thresholds.

Checking your payslip

1. Confirm your tax code and that it isn't an emergency code.
2. Check the year-to-date tax figure against what you'd expect for the months so far.
3. Check National Insurance against the monthly thresholds above, not the annual ones.
4. Make sure the right student loan plan is being deducted.
5. Find out which pension method you're on and whether it's on full pay or qualifying earnings.
6. Look for taxable benefits, such as private medical insurance, that may be reducing your tax code.

If you're thinking about a new job, compare offers on take home pay, not gross salary. The percentage calculator helps you compare pay rises, and if a new role comes with more holiday, the holiday entitlement calculator shows the real difference. For bigger money decisions, our guides to how mortgage repayments are calculated and compound interest show what your take home pay can support.

Make It Flow works with accounting firms on automating repetitive admin, while qualified people keep control of payroll and tax decisions.

FAQ

How much is take home pay on £30,000?

In England, Wales or Northern Ireland for 2026/27, with a 1257L code and no pension or student loan, income tax is £3,486 and employee NI is £1,394.40. That leaves £25,119.60 a year, or about £2,093 a month. Pension contributions and student loan repayments would reduce this further.

Why is my take home pay different from online calculators?

The usual reasons are a different tax code, an emergency code, pension contributions on a different basis, a student loan plan you didn't enter, taxable benefits, or National Insurance being worked out per pay period. Check each line of your payslip against the deductions listed in this guide.

Does salary sacrifice increase take home pay?

Compared with other pension methods at the same contribution, usually yes, because it saves employee National Insurance as well as income tax. It does reduce your contractual salary, which can affect things like mortgage applications and some state benefits, so check the details with your employer before agreeing.

Do I pay Scottish income tax if I work in Scotland but live in England?

No. Scottish income tax depends on where you live, not where you work. If your main home is in England, you pay the rest-of-UK rates. HMRC decides whether you're a Scottish taxpayer based on your address, and your tax code will start with S if you are.

What is the 60% tax trap?

Between £100,000 and £125,140 of adjusted net income, you lose £1 of Personal Allowance for every £2 earned. Combined with the 40% higher rate, that creates an effective income tax rate of 60% on that slice, plus 2% National Insurance. Pension contributions and Gift Aid can reduce adjusted net income.

Is National Insurance worked out monthly or yearly?

For employees, Class 1 National Insurance is worked out on each pay period separately, using weekly or monthly thresholds. Unlike income tax, it isn't spread across the year, so a large bonus in one month can mean more NI that month without any later refund.