Methodology

This app estimates PAYE take-home pay for employees. It is not financial advice, payroll software, or an HMRC calculation.

Current scope

v1 supports salary-based PAYE employment, region-specific income tax bands, employee National Insurance, pensions, student loans, postgraduate loans, tax codes (including BR/D0/D1, K codes, NT, and Scottish codes), and annualised bonus pay.

Assumptions

  • Calculations use the 2026 to 2027 UK tax year.
  • PAYE is annualised rather than payroll-period exact.
  • Pension percentage applies to regular gross salary.
  • Salary sacrifice reduces taxable, NI-able, and loanable pay.
  • Net pay pensions reduce taxable pay but not NI-able pay.
  • Relief at source is shown as a net take-home deduction; higher-rate and taper relief are included by extending the tax bands by the gross contribution (Scottish rates use the same approximation).
  • Bonus is treated as annual taxable extra pay.
  • Emergency suffixes (W1/M1/X) are treated as their base code on an annualised basis rather than per pay period.

Exclusions

v1 does not support self-assessment, sole traders, contractors, company directors, benefits in kind, dividend income, company cars, child benefit charge, Marriage Allowance, or payroll-grade monthly edge cases.

Key terms

  • Effective tax rate — total deductions (income tax, National Insurance, student and postgraduate loan, and your pension contribution) as a percentage of gross pay. It equals 100% minus the share you take home, and is shown in the Tax Explorer tooltip.
  • Marginal rate — the tax and National Insurance (plus any student loan) taken from your next £1 of pay. It is a step function: flat within a band and jumping at each threshold, which is why the Tax Explorer draws it as steps.
  • Personal-allowance taper (the "tax trap") — between £100,000 and £125,140 the £12,570 personal allowance is withdrawn by £1 for every £2 earned, pushing the effective marginal rate to about 62% (higher with a student loan). It is the shaded band on the Tax Explorer chart.
  • Tax code — a code such as 1257L, BR, D0, D1, NT or a K code that sets your tax-free personal allowance and which rates apply. 1257L gives the standard £12,570 allowance; BR/D0/D1 tax all pay at a single rate; NT applies no income tax.
  • Salary band (tier) — the rate tables on the Tax year page show gross salary ranges, derived from the taxable-income bands HMRC publishes plus the £12,570 Personal Allowance. Above £100,000 the allowance taper bends these figures, so the higher and advanced bands top out at £125,140 of gross income, where the allowance reaches £0.
  • National Insurance contributions (NICs) — Class 1 employee National Insurance: nothing below the primary threshold (£12,570), the main rate (8%) between the primary threshold and the upper earnings limit (£50,270), and the additional rate (2%) above it. NICs are charged on gross NI-able pay, with no Personal Allowance.

Official sources