Take Home Salary | Edward Harris Chartered Certified Accountants
Take home salary refers to your net earnings after deductions like tax and National Insurance for the 2026/27 tax year.
This article explains key calculations, official tools, and strategies to maximize your take home pay as a UK business owner or contractor.
Calculating Take Home Salary for 2026/27: Key Deductions
Your take home salary for the 2026/27 tax year depends on updated tax rates effective from April 2026.
Deductions include Income Tax, National Insurance, student loan repayments, and pension contributions.
- Use online calculators to estimate these amounts accurately.
- Factor in allowances like the personal tax threshold to reduce liabilities.
Using Official HMRC Tools to Estimate Net Pay
HMRC provides services to estimate Income Tax and National Insurance for the current tax year.
This tool is for employees paying tax through PAYE and includes deductions for pensions and student loans.
It cannot be used if your only income is from state benefits.
Verifying Past Tax Deductions and Claiming Refunds
Estimate Income Tax for previous years to check for overpayments or errors.
You may claim a refund if you've paid too much tax, but this requires details from P60s and bank statements.
This service is not available for individuals earning £100,000 or more.
Salary Sacrifice Schemes: Pros and Cons
Salary sacrifice options can increase take home pay by reducing taxable income.
However, these schemes have limitations, such as impacting long-term financial planning or not accounting for savings interest.
Use calculators for illustrative purposes only and consult a specialist for major decisions.
Optimising Take Home Pay for Directors: Salary vs Dividends
Dividend tax rates will increase from April 2026, making salary planning crucial.
For the 2025/26 tax year, the optimal director salary is often set at National Insurance thresholds.
- Dividends are tax-efficient as they avoid National Insurance Contributions.
- Salary reduces Corporation Tax as a business expense.
Ready to Maximize Your Take Home Salary?
Understanding your take home salary ensures better financial control and planning for your business.
Let Edward Harris Chartered Certified Accountants provide tailored advice to optimize your earnings and reduce tax liabilities.
