How is your take-home pay worked out?

Income Tax uses your allowance and tax bands

For most people in England, Wales and Northern Ireland, the 2026/27 Personal Allowance is £12,570. Above it, the standard bands are:

• 20% on the portion from £12,571 to £50,270
• 40% on the portion from £50,271 to £125,140
• 45% on the portion above £125,140

The Personal Allowance reduces by £1 for every £2 of adjusted net income above £100,000 and is normally gone at £125,140. Scotland has separate income-tax bands and rates for earnings.

National Insurance is a separate calculation

For a standard employee in 2026/27, Class 1 National Insurance is normally 8% between the Primary Threshold and Upper Earnings Limit, then 2% above it. The annual equivalents are £12,570 and £50,270, but payroll calculates employee National Insurance for each pay period rather than as one annual bill.

Pension deductions do not all work the same way

A workplace pension may use net pay, relief at source or an agreed salary-sacrifice arrangement. Net pay gives Income Tax relief through payroll but does not normally reduce employee National Insurance. Relief at source takes the employee contribution after tax and National Insurance, then the pension provider adds basic-rate tax relief. Salary sacrifice changes contractual pay and may reduce both tax and National Insurance.

Student loan deductions depend on the plan

Payroll repayments are based on earnings above the threshold, not the amount still owed. For 2026/27 the annual thresholds are:

Putting the main deductions together

On a £35,000 salary in England, Wales or Northern Ireland, with a standard tax code and no pension or student loan, the main Income Tax and employee National Insurance deductions leave roughly £2,393 a month. Actual payslips can differ because of tax codes, benefits, bonuses, pay frequency and other deductions.