How to Work Out My Take Home Pay: Gross Salary vs Net Pay Explained

Understanding Gross Salary vs Take-Home Pay

When you see a job advert offering £35,000 a year, it’s natural to wonder what will actually land in your bank account each month. The difference between your gross salary (the headline figure) and your net pay (take-home pay) is made up of several compulsory and voluntary deductions. Learning how to work out my take home pay helps you budget accurately and compare job offers realistically.

What Gets Deducted from Your Gross Salary?

Your employer uses the PAYE (Pay As You Earn) system to deduct:

• Income Tax – based on your taxable income after the Personal Allowance.
• National Insurance (NI) – a separate contribution calculated on your earnings.
• Pension contributions – if you’re enrolled in a workplace scheme (auto-enrolment).
• Student loan repayments – if you have an outstanding loan and earn above the threshold.

Any salary sacrifice arrangements (e.g., cycle-to-work, childcare vouchers) also reduce your gross pay before tax and NI are calculated.

Income Tax Rates for 2026/27

For England, Wales and Northern Ireland, the standard Personal Allowance is £12,570 – you pay 0% on this portion. Above that:

• Basic rate (20%) on income from £12,571 to £50,270
• Higher rate (40%) on income from £50,271 to £125,140
• Additional rate (45%) on income over £125,140

If you live in Scotland, different bands apply: starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%) and top (48%). The thresholds also differ, so your take-home pay may be lower or higher depending on your salary. Always check the Scottish Government’s published rates.

National Insurance Contributions

Employee Class 1 National Insurance is charged separately from Income Tax. For 2026/27:

• 0% on earnings up to £12,570 per year
• 8% on earnings between £12,571 and £50,270
• 2% on earnings above £50,270

Note that NI is calculated on each pay period, not annually, but the annual equivalents are shown above. The upper earnings limit aligns with the higher rate threshold for Income Tax.

Putting It Together: Example for £35,000

Using the standard 1257L tax code, no pension or student loan, the deductions are:

• Income Tax: 20% of (£35,000 – £12,570) = 20% of £22,430 = £4,486
• National Insurance: 8% of (£35,000 – £12,570) = 8% of £22,430 = £1,794.40
• Total deductions: £6,280.40
• Take-home pay: £35,000 – £6,280.40 = £28,719.60 per year (about £2,393 per month)

This means you keep roughly 82p of every £1 you earn. For a full breakdown by salary, see the take-home calculator on our site.

How Pension and Student Loan Change the Picture

If you contribute to a workplace pension through salary sacrifice, your gross pay reduces before tax and NI are calculated. For example, a 5% contribution on £35,000 (£1,750) lowers your taxable income to £33,250, reducing both Income Tax and NI. Your take-home pay drops by less than the full contribution because of the tax relief.

Student loan repayments are deducted after tax and NI. The threshold and rate depend on your plan:

• Plan 1: 9% on earnings above £26,900
• Plan 2: 9% on earnings above £29,385
• Plan 4 (Scotland): 9% on earnings above £33,795
• Plan 5: 9% on earnings above £25,000
• Postgraduate Loan: 6% on earnings above £21,000

On a £35,000 salary with a Plan 2 loan, you’d repay 9% of (£35,000 – £29,385) = £505.35 per year, reducing monthly take-home by about £42.

Using a Calculator to Work Out My Take Home Pay

The simplest way to get an accurate estimate is to use a dedicated calculator that accounts for your specific tax code, region, pension percentage, and student loan plan. Our take-home calculator uses the latest 2026/27 rates from HMRC and GOV.UK. You can also explore salary articles for more detailed guides on specific professions like NHS or teaching.

Common Pitfalls to Avoid

• Forgetting the Personal Allowance taper: If you earn over £100,000, your allowance reduces by £1 for every £2 over, until it disappears at £125,140. This effectively creates a 60% marginal rate on that band.
• Ignoring Scottish rates: If you live in Scotland, using English rates will overestimate your take-home pay.
• Mixing up gross and net: Always compare job offers on net pay after all deductions, not just the headline salary.

Summary

To work out my take home pay, start with your gross salary, subtract Income Tax and National Insurance using the current thresholds, then deduct any pension contributions and student loan repayments. The result is your net pay. For a personalised estimate, use a reliable calculator and always verify with your payslip.

For more data on UK salaries, visit our salary data page. If you have questions about specific deductions, check the topics section.