UK Salary Calculator & Tax Guide 2025/26
Understanding how your salary is taxed in the UK is crucial for financial planning. Our comprehensive guide explains each component of your take-home pay calculation.
UK Income Tax Rates and Bands
UK Income Tax adopts a progressive system where different portions of your income are taxed progressively higher. The following rates apply for the 2025/26 tax year:
- •Personal Allowance: First £12,570 (0% tax) - Tax-free income for most people
- •Basic Rate: £12,571 to £50,270 (20% tax) - Generally applies to UK workers
- •Higher Rate: £50,271 to £125,140 (40% tax) - For higher earners
- •Additional Rate: Over £125,140 (45% tax) - The highest tax applicable for highest earners
National Insurance Contributions (NICs)
National Insurance helps to provide state benefits and the NHS. Employed people need to pay Class 1 NICs:
- •No NICs: Earnings up to £12,570 per year
- •Main rate: 12% on earnings between £12,571 and £50,270
- •Further: 2% on earnings above £50,270
Student Loan Repayments
Student loan repayments are calculated based on your income above a threshold. The current plans are:
- •Plan 1: 9% of income above £22,015 (Northern Ireland and Scotland pre-2012)
- •Plan 2: 9% of income above £27,295 (England and Wales post-2012)
- •Plan 4: 9% of income above £27,660 (Scotland post-2012)
- •Postgraduate Loan: 6% of income above £21,000
Pension Contributions
Pension contributions offer tax advantages and help secure your future. Key points include:
- •Net Pay Arrangement: Contributions are deducted before tax and full relief is obtained immediately
- •Relief at Source: Contributions are deducted after tax and basic rate relief is added automatically
- •Auto-enrolment minimum: A total of 8% (3% employer, 5% employee) of qualifying earnings
Understanding Your Tax Code
Your tax code indicates the amount of Personal Allowance and tax-free income you receive:
- •1257L: Standard tax code for 2025/26 (£12,570 Personal Allowance)
- •K codes: Indicate tax owed from previous years or taxable benefits
- •BR, D0, D1: For second jobs or pensions
- •NT: No tax to be deducted
Salary Sacrifice Benefits
Salary sacrifice helps reduce taxes and national insurance contribution owing:
- •Common schemes: Pension contributions, childcare vouchers, cycle-to-work
- •Tax advantages: Include lowering taxable income and NICs payments
- •Important: It could affect applications for a mortgage and statutory benefits
The tax rates and thresholds mentioned above pertain to the 2025/26 tax year. You should always check with HMRC or consult a tax adviser for the latest information.