UK Take-Home Pay Explained: What Gets Deducted from Your Salary
A breakdown of what comes out of your salary in the UK - income tax, National Insurance, student loans, and pensions - and how to check your take-home pay.
When you receive your salary, several deductions are taken before the money reaches your bank account. Understanding what’s being deducted - and why - helps you make sense of your payslip and plan your finances.
What Gets Deducted
Your gross salary (the amount your employer pays you) is reduced by some or all of the following:
- Income tax
- National Insurance (NI)
- Student loan repayments (if applicable)
- Pension contributions (if enrolled)
What’s left after these deductions is your take-home pay (or net pay).
Income Tax
Income tax is calculated on your taxable income - your gross salary minus your Personal Allowance.
2025/26 tax rates (England, Wales, and Northern Ireland):
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
If you earn over £100,000, your Personal Allowance is reduced by £1 for every £2 earned above £100,000 - meaning it’s fully lost at £125,140.
Scotland has different rates and bands. Scottish taxpayers pay the starter rate (19%), basic rate (20%), intermediate rate (21%), higher rate (42%), advanced rate (45%), and top rate (48%).
National Insurance
National Insurance contributions are deducted from your salary if you earn above the Primary Threshold.
2025/26 employee NI rates:
| Earnings | Rate |
|---|---|
| Up to £12,584 per year | 0% |
| £12,584 to £50,270 | 8% |
| Over £50,270 | 2% |
Your employer also pays NI on your salary (at 15% above the Secondary Threshold), but this doesn’t come out of your pay.
Student Loan Repayments
If you have a student loan, repayments are deducted from your salary once you earn above the repayment threshold. The amount depends on which plan you’re on:
| Plan | Repayment threshold (annual) | Rate |
|---|---|---|
| Plan 1 (started before Sept 2012) | £24,990 | 9% of income above threshold |
| Plan 2 (started Sept 2012 – July 2023) | £27,295 | 9% of income above threshold |
| Plan 4 (Scotland) | £31,395 | 9% of income above threshold |
| Plan 5 (started Aug 2023 onwards) | £25,000 | 9% of income above threshold |
| Postgraduate loan | £21,000 | 6% of income above threshold |
You can have both an undergraduate and postgraduate loan deducted at the same time.
Pension Contributions
Most employees are automatically enrolled into a workplace pension. The minimum contribution rates under auto-enrolment are:
| Employee | Employer | Total | |
|---|---|---|---|
| Minimum | 5% | 3% | 8% |
Your pension contribution is usually deducted from your gross salary before you receive your take-home pay. Depending on the scheme, contributions may be taken before or after tax - salary sacrifice pensions are deducted before tax and NI, reducing both.
Example Breakdown (2025/26 Tax Year)
Here’s how a £35,000 salary breaks down for a basic rate taxpayer with no student loan, a 5% salary sacrifice pension, and the standard tax code:
Step 1 - Pension is deducted from your gross salary before tax and NI:
| Annual | |
|---|---|
| Gross salary | £35,000.00 |
| Pension (5% salary sacrifice) | -£1,750.00 |
| Income after pension | £33,250.00 |
Step 2 - Income tax is calculated on your income after pension:
| Portion of income | Rate | Tax |
|---|---|---|
| First £12,570 (Personal Allowance) | 0% | £0.00 |
| Remaining £20,680 (Basic rate) | 20% | £4,136.00 |
| Total income tax | £4,136.00/year |
Step 3 - National Insurance is also calculated on your income after salary sacrifice:
With salary sacrifice, NI is calculated on the reduced amount - saving you NI compared to a standard pension. Note that the NI threshold (£12,584) is slightly different from the Personal Allowance (£12,570) - they’re set independently.
| Portion of income | Rate | NI |
|---|---|---|
| First £12,584 (NI threshold) | 0% | £0.00 |
| Remaining £20,666 | 8% | £1,654.40 |
| Total NI | £1,654.40/year |
What you take home:
| Annual | Monthly | |
|---|---|---|
| Income after pension | £33,250.00 | £2,770.83 |
| Income tax | -£4,136.00 | -£344.67 |
| National Insurance | -£1,654.40 | -£137.87 |
| Take-home pay | £27,459.60 | £2,288.30 |
With a standard (non-salary sacrifice) pension, NI would be calculated on the full £35,000 instead, resulting in £140 more NI per year and a take-home of £27,321.
This example falls entirely within the basic rate band. A salary above £50,270 would start attracting the higher rate (40%) on earnings above that threshold.
These figures are approximate and assume a standard tax code with no other deductions.
Checking Your Take-Home Pay
The Salary Calculator is a free tool that estimates your take-home pay based on your salary, tax code, pension contributions, student loan plan, and other deductions. It supports multiple tax years and Scottish tax rates.
You can also check your tax code and deductions through your HMRC personal tax account.
Sources
- Income tax rates and Personal Allowances - GOV.UK
- National Insurance rates and categories - GOV.UK
- Repaying your student loan - GOV.UK
- The Salary Calculator
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This article is for informational purposes only and does not constitute financial advice. If you're unsure about your finances, consider speaking to a qualified financial adviser.