About Better Salary Calculator
At Better Salary Calculator, we provide an up-to-date way for you to calculate your take-home pay based on the latest April 2025 UK budget figures.
Our tool covers salary deductions including Income Tax, National Insurance, Student Loan repayments, Pension contributions, Childcare Vouchers, and Bonuses.
We aim to make your financial planning simpler and clearer.
Income Tax (2025-2026)
We base our salary breakdowns on official UK income tax data from April 2025. Taxable income is anything you earn above your personal allowance — and that allowance depends on your circumstances.
Standard Allowance
Most people are entitled to a tax-free personal allowance of £12,570. This means you don’t pay any tax on the first £12,570 of your income.
If your income is over £100,000, this allowance is reduced by £1 for every £2 you earn above that threshold, until it eventually reaches zero. This is based on your adjusted net income (after pension contributions or charitable donations).
Additional Allowances
Blind Person’s Allowance: +£3,130
Married (Age 90+) Rebate: Up to £1,127 (can reduce to £436 based on income)
About Tax Codes
Your tax code tells your employer how much of your income is tax-free. Most people are on the standard 1257L tax code, which means a personal allowance of £12,570.
HMRC may adjust your code based on things like a company car or private medical insurance — reducing your allowance and increasing your tax.
Common Code Examples:
1257L — Standard personal allowance
BR — All income taxed at 20%
D0 — All income taxed at 40%
D1 — All income taxed at 45%
NT — No tax deducted
K — You owe tax from previous income, reducing allowance
S prefix — Scottish tax rates apply (e.g., S1257L)
You can enter your tax code into our calculator to get a more accurate take-home estimate based on your unique setup.
UK Income Tax (2025–2026)
| Personal Allowance | £12,570 |
| Income Limit | £100,000 |
| Blindness Allowance | £3,130 |
| Married Rebate | £1,127.00 |
Tax above personal allowance
| Band | Rate |
|---|---|
| £0 – £37,700 | 20% |
| £37,701 – £125,140 | 40% |
| Over £125,140 | 45% |
Scottish Tax Bands (2025–2026)
| Band | Rate |
|---|---|
| £0 – £2,827 | 19% |
| £2,828 – £14,921 | 20% |
| £14,922 – £31,092 | 21% |
| £31,093 – £62,430 | 42% |
| £62,431 – £125,140 | 45% |
| Over £125,140 | 48% |
National Insurance (NI) Explained
Most employees fall under National Insurance Code A — this applies if you’re not receiving a State Pension and are not in a “contracted-out” pension scheme.
NI Contribution Rates (2025–2026):
£0 – £242/week: No NI due
£242 – £967/week: Charged at 8%
Above £967/week: Charged at 2%
NI code A
| Below £242/week | 0% |
| £242 – £967/week | 8% |
| Above £967/week | 2% |
If you’re already receiving the State Pension, you don’t need to pay National Insurance.
In our calculator, you can tick “No NI” to reflect this — we’ll set your contributions to zero automatically.
💡 Note: Since April 2016, employees can no longer be “contracted out” of the second state pension. That means NI Code D is no longer in use — everyone now pays according to Code A.
Student Loan Repayments Explained (2025–2026)
Which Plan Are You On?
Plan 1
For courses started before 1 Sept 2012 in England or Wales, or if you lived in Northern Ireland
Repaid at 9% on earnings over £26,065
Plan 2
For undergraduate courses started on or after 1 Sept 2012 in England or Wales
Repaid at 9% on earnings over £28,470
Plan 4
For students from Scotland
Since April 2021, repaid at 9% on earnings over £32,745
Postgraduate Loan
Applies to master’s or PhD-level study
Repaid at 6% on earnings over £21,000
This is repaid in addition to any Plan 1, 2, or 4 repayments
💡 You may repay loans under more than one plan if you’ve taken out loans for different courses. In that case, deductions are split proportionally across each loan — but the total deduction still respects your earnings and thresholds.
Student Loan Plans
| Plan 1 | |
| Below £26,065 | 0% |
| Above £26,065 | 9% |
| Plan 2 | |
| Below £28,470 | 0% |
| Above £28,470 | 9% |
| Plan 4 | |
| Below £32,745 | 0% |
| Above £32,745 | 9% |
| Postgraduate Loans | |
| Below £21,000 | 0% |
| Above £21,000 | 6% |
Pension Contributions
Better Salary supports four types of pension contributions. You can enter either a percentage of your salary or apply it to qualifying earnings (salary between £6,240 and £50,270, per auto-enrolment rules). If you receive overtime or bonuses, you can also choose whether pension is deducted from those.
Please note: Every employer calculates “pensionable pay” slightly differently, so our estimates may vary slightly from your actual payslip.
You can contribute up to £60,000 per year and still receive tax benefits. If you exceed this, extra tax may apply.
Types of Pension Schemes
Auto-Enrolment
If you’re eligible, your employer must enrol you in a pension scheme. You’ll contribute a percentage of your earnings between £6,240 and £50,270, which includes salary, overtime, and bonuses.Employer/Occupational Pensions
These reduce your taxable income, lowering your Income Tax. Since April 2016, NI is no longer reduced even if your pension was previously “contracted-out.”Salary Sacrifice
Your salary is contractually reduced, and that amount goes straight into your pension. This lowers your income tax, NI, and student loan repayments – making it a tax-efficient option.Personal Pensions
You pay in from your net salary, and HMRC adds 20% tax relief to your pension automatically. If you’re a higher-rate taxpayer, you can claim the additional relief via your tax return.
Childcare Vouchers
If your employer offers them, you can take part of your salary as Childcare Vouchers, which are tax and NI-free up to a limit.
Joined before April 6, 2011 → Up to £2,916/year
Joined after April 6, 2011:
Basic rate (20%): £2,916
Higher rate (40%): £1,488
Additional rate (45%): £1,320
Childcare vouchers also reduce your student loan repayment, as they lower your gross income for that calculation.
Bonuses
Bonuses are treated as one-off payments. The calculator adds them to your annual salary and shows how much extra tax, NI, and student loan will be taken that month.
You may notice higher deductions in a bonus month, but never more than the bonus itself.
Want to include bonuses in your pension? Tick the “Include Bonus” option.
Mortgage Calculations
Our Mortgage Calculator gives an estimated monthly repayment based on the amount, interest rate, and term you enter. We assume interest is charged monthly.
This tool is designed to give you a general idea of your costs. It doesn’t account for fees or rate changes — so always compare figures with a real lender when you’re ready.
