What is the difference between gross and net pay?

Gross pay is your salary before any deductions. Net pay (take-home pay) is what you actually receive after income tax, National Insurance, student loan repayments, and pension contributions have been deducted. For most UK employees, net pay is 70–85% of gross pay depending on salary level.

How is income tax calculated in the UK?

Income tax is calculated on your taxable income — your gross salary minus your Personal Allowance (£12,570 for 2026/27). The first £37,700 of taxable income is taxed at 20% (basic rate). Income between £37,701 and £112,570 is taxed at 40% (higher rate). Income above £125,140 is taxed at 45% (additional rate). Scotland has different rates and bands.

What is National Insurance and how much do I pay?

National Insurance (NI) is a tax on earnings that funds state benefits including the NHS, State Pension, and unemployment support. For 2026/27, employees pay 8% NI on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. There is no NI on earnings below £12,570.

Does my pension contribution reduce my tax?

Yes. Pension contributions reduce your taxable income, so you pay less income tax and (if made via salary sacrifice) less National Insurance too. A basic rate taxpayer contributing £100 to a pension effectively costs them only £72 after tax relief. Higher rate taxpayers can claim additional relief through Self Assessment.

What is the Marriage Allowance and can I claim it?

Marriage Allowance lets a lower-earning spouse or civil partner transfer £1,260 of their Personal Allowance to their partner, saving up to £252 in tax per year. To qualify, the lower earner must have income below £12,570, and the higher earner must be a basic rate taxpayer (income between £12,571 and £50,270). Apply at gov.uk/marriage-allowance.