UK Salary Increase Calculator

A pay rise sounds simple until you try to work out what actually lands in your bank account each month. Income Tax, National Insurance, pension contributions and student loan repayments all take a bite out of a gross increase before you see any of it, and the portion taken can be surprisingly large if the rise pushes part of your salary into a higher tax band. This calculator shows exactly what a pay rise is worth in take-home terms.

How to use the salary increase calculator

Enter your current annual salary, then choose whether your increase is a percentage or a fixed amount. Add your region, since Scotland uses different Income Tax bands to the rest of the UK, your student loan plan if you have one, and your pension contribution percentage. The calculator shows your new gross salary, new take-home pay, and exactly how much extra you will see each month and each year, after every deduction.

How the calculation works

The calculator works out your take-home pay twice: once on your current salary, and once on your new salary after the increase is applied, using the same Income Tax, National Insurance, pension and student loan calculations behind our take-home pay calculator. The difference between the two net figures is your real increase in take-home pay, which is almost always a smaller percentage than your gross pay rise, since UK Income Tax and National Insurance are both charged at increasing rates on higher portions of income.

Worked example

Take someone earning £35,000 in England, receiving a 5% pay rise, with no student loan and a 5% pension contribution.

Their new gross salary is £36,750, a £1,750 increase. After tax, National Insurance and pension are recalculated on the higher salary, their take-home pay rises by a smaller percentage than the 5% gross increase, since part of the extra salary is taxed at their marginal rate rather than their lower average rate. The exact figure depends on where their salary sits relative to the tax bands, which is exactly what the calculator above works out precisely for your own numbers.

Try increasing the pension contribution percentage in the calculator above while keeping the same pay rise. You will see the immediate take-home increase shrinks, since more of the rise goes into your pension pot instead of your pay packet, though the money is not lost, it is simply going towards your retirement rather than your monthly income.

Why marginal rate matters more than average rate here

Your marginal rate is the tax rate charged on your next pound of income, while your effective or average rate is your total tax bill as a percentage of your whole salary. These two figures can be very different, and it is your marginal rate, not your average rate, that determines how much of a pay rise you actually keep.

For most people in England, Wales and Northern Ireland earning between £12,570 and £50,270, the marginal rate on a pay rise is 28% once Income Tax (20%) and employee National Insurance (8%) are combined. Above £50,270, the combined marginal rate rises to 42% (40% Income Tax plus 2% National Insurance), and between £100,000 and £125,140, the Personal Allowance taper pushes the effective marginal rate as high as 60% for many taxpayers, before even adding student loan repayments on top. A pay rise that lands inside this band can be taxed far more heavily than most people expect.

Scottish taxpayers face a different set of marginal rates, since Scotland uses six Income Tax bands rather than three, with slightly different thresholds and higher top rates. This calculator applies the correct bands automatically once you select Scotland as your region, so you do not need to work out which band your pay rise falls into by hand.

Common mistakes to avoid

A common mistake is assuming a percentage pay rise translates directly into the same percentage increase in take-home pay. It rarely does, because of how UK Income Tax and National Insurance bands work. Someone getting a 10% pay rise should not expect their monthly take-home pay to rise by exactly 10%, and being aware of this in advance avoids disappointment when the new payslip arrives.

It is also worth checking whether a pay rise pushes you across a significant threshold, such as the £50,270 Higher Rate band or the £100,000 Personal Allowance taper. Crossing these points can mean a noticeably larger share of any further increase is lost to tax, which is worth knowing if you are negotiating a rise or comparing job offers with different salary structures.

Finally, remember that a gross pay rise which simply matches inflation is not really a pay rise in real terms at all, since your cost of living has risen by a similar amount. This calculator shows your after-tax cash increase clearly, which is a useful starting point, but comparing that figure against inflation over the same period gives a fuller picture of whether you are genuinely better off.

Related calculators

For the full picture of your current pay, our take-home pay calculator gives a complete monthly and annual breakdown, while our Income Tax calculator and National Insurance calculator break down each deduction on its own. Our income tax guide explains the UK tax bands and the 60% tax trap in more detail, which is particularly useful if a pay rise is bringing you close to £100,000.