Your take home salary — the amount that actually lands in your bank account each month — is rarely a simple percentage of what your employer pays you. Income tax, National Insurance, pension contributions, and sometimes student loan repayments all take their share before you see a penny. And because these deductions interact with each other in ways that aren’t always obvious, the gap between gross and net can feel like a mystery.

In our experience, a lot of confusion arises not from the rules being complicated in isolation, but from people not knowing which rules apply to them. A different tax code, a mid-year pay rise, or starting a new job can all shift your net pay in ways that catch people off guard.

So let us walk through how your take home salary is actually calculated in 2026/27 — and what to do if you think something looks wrong.

Your gross salary is what your employment contract states — the full amount your employer agrees to pay you before any deductions. Your net salary (your take home) is what remains after tax, National Insurance, and any other deductions have been applied.

For most UK employees, those deductions are collected automatically through PAYE — Pay As You Earn. Your employer calculates what you owe each month and sends it to HMRC directly, so you never hold the tax in the first place.

The practical result is that two people on the same gross salary can end up with noticeably different take home figures, depending on their tax code, pension arrangement, or whether they have a student loan. Understanding that gross and net are not fixed in a simple ratio is the first step to making sense of your payslip.

For the 2026/27 tax year (6 April 2026 to 5 April 2027), the main deductions most employees will see are:

Income tax

Everyone gets a Personal Allowance of £12,570 — income up to that threshold is tax-free. Above that, you pay:

• 20% (basic rate) on income between £12,571 and £50,270
• 40% (higher rate) on income between £50,271 and £125,140
• 45% (additional rate) on income above £125,140

It is worth noting that the Personal Allowance tapers away once your income exceeds £100,000 — reducing by £1 for every £2 earned above that threshold, and disappearing entirely at £125,140.

National Insurance

Employees pay National Insurance contributions on earnings above the Primary Threshold. This is separate from income tax and calculated independently — so higher earners effectively face both a higher income tax rate and an NI charge on the same slice of income.

Pension contributions

If you are auto-enrolled into a workplace pension, your contributions come out of gross pay before you receive anything. This reduces your taxable income, which is one reason pension saving is tax-efficient — though it does lower your immediate take home figure.

Student loan repayments

Depending on your plan type and income level, student loan repayments are collected through PAYE on top of tax and NI. These can add a meaningful reduction to monthly net pay that many people overlook when budgeting.

Your tax code is the mechanism HMRC uses to tell your employer how much of your income to treat as tax-free each month. The standard code for most people in 2026/27 is 1257L, which reflects the £12,570 Personal Allowance spread across the year.

If your tax code is wrong — and it does happen — you will either overpay or underpay tax each month. Common causes of an incorrect code include:

• Starting a new job without a P45 from your previous employer, which can trigger an emergency tax code
• Having multiple sources of income, which HMRC needs to account for across your codes
• Benefits in kind (company car, private medical insurance) that reduce your effective allowance
• HMRC adjusting your code to collect underpaid tax from a previous year

An emergency tax code typically assumes you have no personal allowance or that the current month’s pay is your entire year’s earnings — both of which can cause a significant short-term reduction in take home salary. The good news is that overpaid tax through an incorrect code is usually recovered either automatically or via a Self Assessment return.

If your payslip shows a code you do not recognise, or your net pay has dropped unexpectedly, checking your tax code is the first place to look. HMRC’s online account allows you to view and query your code directly.

Online take-home calculators are useful for a rough sense of what to expect — but they work from assumptions that may not match your situation. Most use the standard 1257L tax code, assume no student loan, and treat pension contributions as optional. If your circumstances differ from those defaults, the estimate will be off.

There are also some less obvious situations that calculators frequently miss:

• Mid-year pay rises. If you receive a salary increase partway through the tax year, your PAYE deductions recalculate from that point — and HMRC may also adjust your code to collect any underpayment already accumulated in the year.
• The £100,000 trap. Once your income approaches £100,000, the tapering of the Personal Allowance creates an effective marginal rate of 60% on income in the £100,000–£125,140 band. This surprises people every year, and many calculators do not flag it clearly.
• Salary sacrifice arrangements. Some employees exchange part of their salary for benefits such as extra pension contributions or childcare vouchers. This reduces gross pay for tax and NI purposes, which improves take home — but it also changes the starting figure that calculators typically use.

The broader point is that a pay calculation from a generic tool is a starting estimate, not a precise figure. If you need accuracy — for a mortgage application, a redundancy calculation, or a tax planning decision — it is worth having a professional run through the numbers with your actual circumstances in mind.