Methodology published 17 September 2026. Default tax year: 2026/27, effective 2026-04-06 to 2027-04-05. Underlying rate tables last verified 2026-08-18. A new article or comparison date does not imply that every rate was re-verified that day.
Calculation sequence
- Convert the selected pay frequency into annual gross pay. Pension contributions use a percentage of full regular salary, not automatically the scheme’s qualifying-earnings band.
- Apply pension treatment: salary sacrifice reduces contractual cash pay and NI earnings; net pay reduces taxable pay; relief at source deducts the member payment from take-home and includes the provider’s basic-rate top-up in the gross pension.
- Work out the allowance, including the £1-for-£2 reduction above £100,000 of adjusted net income. Apply the selected tax region’s Income Tax bands or supported tax-code treatment.
- Apply annual employee NI thresholds, student-loan thresholds and any modelled Child Benefit charge. Postgraduate deductions can run alongside an undergraduate plan; multiple undergraduate plans use the lowest active threshold.
- Subtract deductions and member pension costs. Monthly, weekly and daily displays divide the annual result; they do not reproduce a payroll calculation for that period.
Pension relief and comparison boundaries
For relief at source, the provider’s basic-rate top-up is included. Additional relief that must be claimed separately is excluded from take-home pay. The claim may be made through Self Assessment or HMRC’s claim service, depending on circumstances. Consequently a relief-at-source cash-flow comparison is not a comparison of final settled tax liabilities. Contributions, scheme eligibility and minimum-wage limits must be checked with the employer.
Bonuses and pay rises
The annual-bonus result is the difference between a full-year calculation with and without the bonus. Regular pension contributions stay based on regular salary; bonus sacrifice and pension contributions on the bonus are not modelled. The payslip in the month of payment can differ because PAYE can be cumulative and NI and loans use pay-period thresholds.
A salary comparison runs both complete annual scenarios and subtracts their results. If a rise crosses a tax band or the allowance taper, several marginal rates can apply to different parts of that rise.
What is outside this model?
Self-employment, dividend and savings taxation, multiple-job aggregation, directors’ NI rules, every NI category, actual year-to-date payroll records, benefit interactions and all personal reliefs are outside the annual salary model. Tax-code support is an approximation of annual effect. An emergency code does not recreate a month-by-month payroll record. Loan interest, balances and write-off dates are not calculated.
Worked checks
For 2026/27 in England, Wales and Northern Ireland, with the standard allowance, no pension, no loans and employee NI below State Pension age: increasing annual pay from £40,000 to £41,000 adds £720 after 20% Income Tax and 8% NI on the increase. From £100,000 to £101,000, £500 of allowance is lost; the extra Income Tax is £600 and NI £20, leaving £380.
On £40,000, a £2,000 gross pension contribution costs £1,600 through net pay. Salary sacrifice also saves £160 employee NI, making the annual take-home cost £1,440. These are scenario checks, not a claim that every pension arrangement behaves identically.
Sources and versioning
- HMRC employer rates and thresholds
- Scottish Government Income Tax bands
- HMRC student-loan payroll guidance
- HMRC pension tax relief and claims
- HMRC salary sacrifice guidance
Research downloads have a dated version, source links and assumptions. We retain dated files when publishing a replacement. Calculations are checked with automated tests and selected worked examples; no independent professional review is claimed. See the editorial policy and corrections history.