Salary Calculator Assumptions and Methodology

Tax year and rates

All calculations use HMRC rates and thresholds for 2026/27 (6 April 2026 to 5 April 2027). Rates are updated each April when the new tax year starts.

Personal allowance

The calculator assumes a personal allowance of £12,570 (tax code 1257L) and a single PAYE employment with no adjustments.

Above £100,000, the personal allowance is reduced by £1 for every £2 of income over that threshold. By £125,140 it's gone entirely, creating an effective 60% marginal rate in that band.

Income tax calculation

Income tax is charged on what's left after the personal allowance. The 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

Class 1 employee NI is 8% on earnings between £12,570 and £50,270, then 2% above £50,270.

This calculator works on annual figures. HMRC calculates NI per pay period, so there may be small rounding differences compared to your payslip.

Pension contributions

Pension is off by default. When you set a percentage, it's applied to qualifying earnings between £6,240 and £50,270, matching the auto-enrolment rules.

You can choose between two pension types. With relief at source, the contribution comes from post-tax pay and the pension provider claims 20% tax relief from HMRC; higher-rate taxpayers reclaim the difference through self-assessment. With salary sacrifice, the contribution is deducted from gross pay before income tax and National Insurance are calculated, so you save both income tax and NI on the amount sacrificed.

Blind person's allowance

If you are registered blind (or severely sight-impaired), you are entitled to an additional £3,070 tax-free allowance on top of the standard personal allowance for 2026/27.

The calculator models this as a reduction in income tax equal to £3,070 multiplied by your marginal rate: 20% for basic-rate taxpayers, 40% for higher-rate, or 21% for Scottish intermediate-rate taxpayers. Because the adjustment uses an approximation rather than running the full tax engine again, results may differ by a few pounds compared with an HMRC-issued tax code.

Salary sacrifice (other benefits)

Beyond pension, some employers offer salary sacrifice schemes for benefits such as childcare vouchers, electric vehicles, or cycle-to-work. The calculator lets you enter a monthly sacrifice amount for these arrangements.

The monthly figure is annualised and subtracted from gross pay before tax and National Insurance are calculated, which is how genuine salary sacrifice works in practice. The resulting take-home increase reflects both income tax and NI savings on the sacrificed amount.

Student loan repayments

The calculator supports all five UK student loan schemes: Plan 1 (£26,900 threshold), Plan 2 (£29,385), Plan 4 (£33,795), Plan 5 (£25,000), and the postgraduate loan (£21,000).

Repayments are calculated monthly, following PAYE from HMRC:

1. The annual threshold is divided by 12 and rounded to the nearest whole pound, e.g. £26,065 ÷ 12 = £2,172.
2. The amount due for repayment is calculated by subtracting the monthly threshold from gross monthly pay.
3. The repayment rate (9% for undergraduate schemes, 6% for postgraduate) is applied to that amount.
4. 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.

Time period conversions

1 year = 12 months, 52 weeks, 260 working days (5 × 52). Hourly rates use the weekly hours you enter. These are standard conventions and may not match every employer's payroll system.

Not included in our calculator

• Marriage allowance.
• Gift Aid donations (which can extend the basic-rate band for higher-rate taxpayers).
• Benefits in kind or company car tax.
• 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

Results are checked against HMRC published examples and other calculators. Small differences (usually under £1/month) can occur because of rounding. Treat the output as an estimate, not a definitive payroll figure.

When rates are updated

Rates and thresholds are updated after HMRC confirms the figures for each new tax year, usually following the Autumn Budget or Spring Statement. The new tax year starts on 6 April.