Salary Calculator Assumptions and Methodology

This page explains the various assumptions and methods employed by our salary calculator for computation. Understanding them gives you a chance to interpret the outcome of the calculator and identify inconsistencies where your own situation has to be adapted accordingly.

Tax year and rates

HMRC rates and thresholds for the tax year 2025/26 (6th April 2025 to 5th April 2026) are applied in all cases. The calculator is updated with every new tax year so that the new rates may be reflected in it.

Personal allowance

A standard personal allowance of £12,570 is assumed, corresponding to tax code 1257L, on the basis that you have a single PAYE employment with no adjustments.

An “income trap” starts to become visible from the £100,000 gross threshold, where £1 of the standard personal allowance is withdrawn for every £2 of additional income which exceeds £100,000, until such income hits £125,140. This results in a tapered reduction and eventual elimination.

Income tax calculation

After deducting the personal allowance, income tax is levied on the chargeable income. This calculator supports two tax regimes:

England, Wales & Northern Ireland – Three bands: basic at 20%, higher at 40%, and additional at 45%.
Scotland – Six bands: starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%), and top (48%).

National Insurance

Employee Class 1 National Insurance deductions are divided into two bands: 8% on income between the primary threshold (£12,570) and the upper earnings limit (£50,270), followed by 2% above £50,270.

National Insurance in this calculator is annual. HMRC calculates taxes per pay period, so some slight rounding differences are likely to be present between yearly data and deductions on your payslip.

Pension contributions

Pension contributions require manual input and are not automatically enabled. The calculator applies the specified percentage, deducting from qualifying earnings between £6,240 and £50,270 in line with the auto-enrolment regulatory framework.

The pension deduction is applied before income tax. Salary sacrifice is not modelled — if salary sacrifice is being used by your employer, your take-home pay could be different as NI is also affected.

Student loan repayments

The calculator supports all five UK student loan schemes: Plan 1 (£26,065 threshold), Plan 2 (£28,470), Plan 4 (£32,745), Plan 5 (£25,000), and the postgraduate loan (£21,000).

Repayments are calculated monthly, following PAYE from HMRC:

The annual threshold is divided by 12 and rounded to the nearest whole pound, e.g. £26,065 ÷ 12 = £2,172.
The amount due for repayment is calculated by subtracting the monthly threshold from gross monthly pay.
The repayment rate (9% for undergraduate schemes, 6% for postgraduate) is applied to that amount.
The monthly payment is multiplied by 12 to give the yearly total.

If you hold both an undergraduate and a postgraduate loan, both repayments will be applied at the same time.

Conversion of periods

The calculator uses the following conversion rates: one year has 12 months, 52 weeks, and 260 working days (5 × 52). Hourly wages assume the number of hours you specify to work per week. These are standard conventions and may not match every payroll system for every employer.

Not included in our calculator

Marriage allowance or blind person's allowance.
Gift Aid donations (which can extend the basic-rate band for higher-rate taxpayers).
Benefits in kind or company car tax.
Salary sacrifice arrangements.
Share schemes (SIP, SAYE, EMI, CSOP).
Tax relief on professional subscriptions or flat-rate expenses.
Child benefit high-income charge.
Non-standard tax codes (BR, D0, NT, K codes).
Multiple employments or director's NI.

Validation and accuracy

Calculator results are checked against HMRC published examples and known calculators. Small differences, usually under £1 a month, can occur due to rounding conventions. A calculated result is an approximation and should not be assumed to be a definitive payroll figure.

Schedule updates

When HMRC publishes confirmed figures for new tax years, usually after the Autumn Budget or Spring Statement, tax rates and thresholds are updated. The calculation schedule is generally updated for each new year, which starts on 6 April.