UK employees pay Income Tax and Class 1 National Insurance via PAYE — deducted before your pay arrives. For 2026/27 the first £12,570 of salary is tax-free (the Personal Allowance), then you pay 20% up to £50,270, 40% up to £125,140, and 45% above. Class 1 NI is 8% on earnings between £12,570 and £50,270, then 2% above. Enter your gross salary above to see the exact split.
- Personal Allowance 2026/27: £12,570 — no Income Tax on the first £12,570 of income.
- Basic rate: 20% on taxable income from £1 to £37,700 (total income £12,571–£50,270).
- Higher rate: 40% on taxable income from £37,701 to £112,570 (total income £50,271–£125,140).
- Additional rate: 45% on taxable income above £112,570 (total income above £125,140).
- Class 1 employee NI: 8% on earnings £12,570–£50,270; 2% above £50,270.
- The Personal Allowance tapers by £1 for every £2 of income over £100,000, creating an effective 60% rate to £125,140.
- Salary-sacrifice pension contributions reduce your taxable income and the Income Tax you pay, but employee NI is calculated on gross salary (before sacrifice).
2026/27 Income Tax and NI rates at a glance
| Income band | Income Tax rate | Class 1 NI rate |
|---|---|---|
| Up to £12,570 (Personal Allowance) | 0% | 0% |
| £12,571 to £50,270 (basic rate) | 20% | 8% |
| £50,271 to £125,140 (higher rate) | 40% | 2% |
| Above £125,140 (additional rate) | 45% | 2% |
Worked example — £45,000 salary, no pension or student loan
| Item | Annual | Monthly |
|---|---|---|
| Gross salary | £45,000 | £3,750 |
| Income Tax (£45,000 − £12,570 = £32,430 × 20%) | −£6,486 | −£540.50 |
| Class 1 NI ((£45,000 − £12,570) × 8%) | −£2,594.40 | −£216.20 |
| Take-home pay | £35,919.60 | £2,993.30 |
| Effective tax rate (IT + NI) | 20.2% | |
How does PAYE work?
Pay As You Earn (PAYE) is the system HMRC uses to collect Income Tax and NI from employees directly from payroll. Your employer receives a tax code from HMRC (usually starting with a number reflecting your tax-free allowance, such as 1257L for the standard Personal Allowance) and uses it to calculate the deduction for each pay period. You do not normally file a Self Assessment return if PAYE is your only income.
What does a pension contribution save in tax?
A £1,000 pension contribution by a basic-rate taxpayer saves £200 in Income Tax (and in a relief-at-source scheme the pension provider adds the basic-rate relief automatically). A higher-rate taxpayer claims the extra 20% (another £200) through their Self Assessment return. Salary-sacrifice contributions additionally reduce your NI bill because they reduce your pensionable pay before NI is calculated.
Frequently asked questions
Why is my actual take-home different from the calculator?
The calculator uses the standard PAYE tax code (1257L). If your tax code is different — because you have benefits in kind, unpaid tax from a prior year, or multiple jobs — your employer deducts a different amount. Check your payslip tax code against your PAYE coding notice from HMRC.
Does this calculator cover Scotland?
No. Scottish Income Tax uses different bands and rates (set by the Scottish Parliament). The figures here apply to England, Wales and Northern Ireland only.
Are employer NI contributions included?
No. Employer NI (15% above the £5,000 secondary threshold) is a cost to the employer, not a deduction from your take-home pay. The calculator shows only the employee-side deductions (Class 1 employee NI at 8%/2%).
I also have self-employed income — what do I pay?
Enter your salary in the "other taxable income" field of the Sole Trader Tax Calculator — it uses the same Income Tax bands but adds Class 4 NI on your self-employed profit.