Gross vs Net Salary: What Is the Difference?
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Gross pay is before deductions. Net pay is what you receive. See a £30,000 example with clearly stated pension assumptions.
Gross salary is pay before deductions. Net salary, or take-home pay, is what remains after tax, National Insurance, pension contributions and any other deductions. Use net pay when deciding what you can spend each month.
What comes off gross pay?
Income Tax depends on your tax code, taxable income and tax region. Employee National Insurance usually depends on earnings in each pay period. Pension and student loan deductions depend on the arrangements that apply to you.
Your employer's pension contribution and employer National Insurance are additional employer costs. They are not deducted again from the gross salary in your contract.
A £30,000 example without a pension
For 2026/27, assume England, Wales or Northern Ireland, the standard Personal Allowance, a typical employee below State Pension age and no pension, loans, other income or adjustments.
| Item | Annual estimate | Monthly average |
|---|---|---|
| Gross salary | £30,000 | £2,500 |
| Income Tax | £3,486 | £290.50 |
| Employee National Insurance | £1,394.40 | £116.20 |
| Take-home pay | £25,119.60 | £2,093.30 |
Income Tax is 20% of £17,430 after the £12,570 allowance. NI uses 8% of the same slice in this annual illustration. Scotland has different Income Tax bands. See HMRC's current rates.
What changes with a pension?
Suppose you exchange 5% of the whole £30,000 salary for a pension contribution through salary sacrifice. That is £1,500 a year. Cash pay before tax becomes £28,500, Income Tax becomes £3,186 and annual employee NI becomes £1,274.40. Take-home pay is £24,039.60 a year, averaging £2,003.30 a month.
That is £90 less take-home each month while £125 a month goes into the pension from the sacrifice, before any other employer contribution. The difference comes from the tax and NI savings.
A 5% contribution based on qualifying earnings is a different amount. A net pay or relief-at-source contribution also has different NI treatment. Check the pension methods guide before comparing results.
Comparing job offers
Compare gross salary, expected net pay, hours and the employer pension separately. A role with lower cash pay may have a larger employer contribution, but money in a pension is not available for this month's bills.
Benefits such as medical insurance can create taxable income. Salary sacrifice can change contractual cash pay and some pay-related entitlements. Ask the employer how the package is calculated rather than treating every benefit as extra cash.
Estimate your own take-home pay
Use the salary calculator with your pay frequency, region, tax code and available deduction settings. Its result is an estimate. A particular payslip can differ because of cumulative tax adjustments, irregular earnings or payroll rounding.
If your tax code is unexpected, check HMRC's tax-code explanation. A code different from 1257L can be correct; it is not evidence by itself that you are overpaying.