Understanding your UK take-home pay
The Personal Allowance
Everyone starts with a Personal Allowance — the slice of income taxed at 0%. For 2026/27 it is £12,570. You only pay Income Tax on earnings above it. The allowance is frozen, so as wages rise more people are pulled into paying tax — an effect known as fiscal drag.
Income Tax bands
Above the allowance, England, Wales and Northern Ireland use three main bands: the basic rate (20%) on income up to £50,270, the higher rate (40%) from £50,271 to £125,140, and the additional rate (45%) above £125,140. Like the US, these are marginal — moving into the 40% band only taxes the pound above the threshold at 40%, not your whole salary. Scotland sets its own bands and rates.
National Insurance
On top of Income Tax, employees pay National Insurance (NI). For 2026/27 the main employee rate is 8% on earnings between the primary threshold (£12,570 a year) and £50,270, then 2% on everything above. NI is a separate deduction from Income Tax and is one reason your payslip shows two different tax lines.
The £100,000 "60% tax trap"
A quirk catches high earners: for every £2 you earn over £100,000, you lose £1 of your Personal Allowance, until it disappears entirely at £125,140. In that band each extra pound is taxed at 40% and claws back allowance, producing an effective marginal rate of around 60%. Pension contributions are the classic way to bring taxable income back under £100,000 and reclaim the allowance.
Putting it together
On a £50,000 salary in 2026/27 you’d pay 20% Income Tax on income between £12,570 and £50,000, plus 8% NI on the same band — leaving take-home of roughly £38,000–£39,000 a year. Add a student loan or pension and the picture shifts again, which is exactly what a take-home calculator is for.