The gross rise is never what you keep
A pay rise is quoted as a gross figure, but income tax and National Insurance come out before it reaches your account. Because the extra pay is taxed at your marginal rate, the rate on your top pound rather than your average, the net gain is always smaller than the headline number. A £2,000 rise on a £40,000 salary is worth about £1,440 more take-home a year, roughly £120 a month, once 20% tax and 8% National Insurance are taken off.
How much of a rise you keep at each level
Your keep-rate falls as your salary climbs into higher tax bands. This is why the same percentage rise is worth less, in your pocket, to a higher earner. Here is roughly what you keep from each extra pound at 2026/27 rates in England, Wales and Northern Ireland.
| Salary band | What is charged | Keep-rate |
|---|---|---|
| Below £12,570 | No tax, no NI | You keep 100% |
| £12,570 – £50,270 | 20% tax + 8% NI | You keep 72% |
| £50,270 – £100,000 | 40% tax + 2% NI | You keep 58% |
| £100,000 – £125,140 | 40% tax + 2% NI + Personal Allowance taper | You keep about 40% |
| Over £125,140 | 45% tax + 2% NI | You keep 53% |
Keep-rates ignore any student loan repayment, which adds 9% (or 6% for a postgraduate loan) on the part of the rise above your plan threshold. Scotland uses different income tax bands. Verify current figures at gov.uk; this tool is a guide, not tax advice.
When a rise crosses £50,270
The higher-rate threshold sits at £50,270. If your rise starts below it and ends above it, the part underneath keeps about 72p in the pound, and the part above keeps about 58p, because income tax jumps to 40% while National Insurance drops to 2%. The calculator flags this crossing so you can see why the top slice of the rise feels thinner than the rest.
The £100,000 trap
Between £100,000 and £125,140 your Personal Allowance is withdrawn by £1 for every £2 you earn. Stacked on 40% tax and 2% National Insurance, that produces an effective rate of about 60% on this band. A rise that lands here keeps far less than one lower down, which is why many people in this range redirect the extra into a pension to sidestep the taper. When your rise reaches this zone, the calculator shows a warning.
How to use this calculator
- Enter your current annual gross salary, the figure before tax and National Insurance.
- Choose whether to enter the rise as a percentage or as your new salary, then type it in.
- Pick your student loan plan if you have one, so the net figure includes your repayment.
- Read the net gain: the extra take-home you keep per year and per month.
- Check the effective marginal rate and any warning about crossing £50,270 or £100,000.
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Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for UK and Australian readers.
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