How do I calculate my monthly take home pay? - UK Salary Tax Calculator (2022)

Whether you get paid by the hour, the week, or the month, you can sometimes receive a payslip and be surprised by the deductions that have been made to your earnings.

But when you have to pay tax on your income, put into a pension, pay national insurance contributions, and repay your student loan all at the same time, it is hardly surprising that your monthly take-home pay can seem like less than it should be.

Your payslip should enumerate exactly how much of your earnings were spent on what.

However, if your payslip doesn't tell you this information or if you want to figure out how much your take-home pay would be for a job you don't yet have, then read on as we explore how to calculate your monthly take-home pay.

How do I calculate my monthly take-home pay?

The simplest way to calculate your monthly take-home pay is to use a tax and salary calculator that takes other payments such as pension and student loan contributions into account. Otherwise, you can work out your take-home pay manually by subtracting all of your other taxes and payments from your monthly wage.

We are going to take you through a step-by-step process of how to work out your monthly take-home pay. For each process, we will use the example of someone earning £60,000 per year (£5,000 per month) pre-tax. This figure is far higher than the average UK salary and many of the contributions you make each month are progressive, meaning your relative contribution will be less if you earn less.

So let's first jump in and find out how to work out your monthly wage.

How to work out my monthly wage

If you are unsure what your monthly wage is but know your hourly wage, weekly wage, or your annual salary, there are simple steps you can take to work out how much you will earn before tax each month.

(Video) UK Salary Calculator : Net Take Home Pay Calculation

If you know your annual salary, to work out your monthly wage you simply take your annual salary figure and divide it by 12 to arrive at your monthly wage.

If you get paid weekly and want to work out your monthly wage, you need to first multiply your weekly earnings by 52 (the number of weeks in the year) and divide the answer by 12 (the number of months in the year).

If you are paid by the hour and want to work out your monthly wage, you need to first multiply your hourly wage by the number of hours you work in a day, for example, 8. Then you multiply your answer by the number of days you work in a week, for example, 5. Now you have your weekly wage you follow the same steps as above by multiplying your weekly wage by 52 and then dividing the answer by 12.

How much are my monthly Income Tax contributions?

The best way to calculate your Income Tax contributions is to use an Income Tax calculator. However, it is perfectly possible to calculate your contributions yourself.

Your Income Tax contributions are determined by which Income Tax band you are in.

In the UK, everyone has a tax-free allowance of £12,570. However, if you earn over £100,000 per year, your tax-free allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

In 2022, the UK Income Tax rates are currently the following:

BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £150,00040%
Additional rateover £150,00045%

Income Tax is paid on earnings within the different thresholds. For example, if you earn £60,000 per year (£5,000 per month):

  • You pay no tax on the first £12,570
  • You pay 20% on earnings between £12,571 and £50,270 (£37,700)
  • 20% of £37,700 is £7,540
  • You pay 40% on earnings between £50,271 and £60,000 (£9,729)
  • 40% of £9,729 is £3,891.60
  • So, if you earn £60,000 per year, you pay a total of £11,431.60 in Income Tax.

If you then want to work out what that is a month, simply divide the number 12.

  • £11,431 / 12 = £952.63
  • So your monthly Income Tax contribution is £952.63 if you earn £60,000 per year.

How much are my monthly National Insurance contributions?

(Video) UK Salary tax calculator | Calculate your UK salary tax

National Insurance (NI) is a tax on earnings that is paid into a fund. This fund then contributes to state benefits such as the state pension, sick pay, maternity leave, or unemployment benefits. To be eligible for a full state pension, you need to have made NI contributions for at least 30 years.

You are eligible to pay NI contributions if you are aged 16 or older and either:

  • An employee earning over £190 per week
  • Self-employed and making £6,725 or above in profit annually

The amount of NI you contribute is determined by which NI class you are in.

National Insurance classes

National Insurance classPaid by
Class 1Employees earning more than £190 a week and under State Pension age
Class 1A or 1BEmployers, who pay these directly on their employee’s expenses or benefits
Class 2Self-employed individuals who earn profits of £6,725 or more per year
Class 3Self-employed individuals who want to make voluntary contributions to fill or avoid gaps in their National Insurance record
Class 4Self-employed people earning profits of £9,881 or more a year

Once you have determined the class you are in, you can then find out how much you contribute.

Class 1

IncomeClass 1 rate
£190 to £967 a week (£823 to £4,189 a month)13.25%
Over £967 a week (£4,189 a month)3.25%
  • So if you earn £5,000 per month (£60,000 per year) you pay 13.25% on £4,189, which is £555.04
  • And you pay 3.25% on the final £811, which is £26.35.
  • So in total, your monthly NI contributions are £581.39.

Class 2

ProfitsClass 2 Rate
Less than £6,725£0 per week
£6,725 and over£3.15 per week

Class 3

Class 3 is for self-employed people who do not pass the threshold for paying NI contributions but want to make contributions anyway so there isn't a gap in their payments, which means they would still be eligible for the state pension.

For these Class 3 voluntary NI contributions, the current tax rate is £15.85 a week.

Class 4

ProfitsClass 4 Rate
Less than £9,8810%
£9,881 - £50,27010.25%
Over £50,2703.25%

Once you have calculated your NI contributions, you should also subtract that figure from your monthly pre-tax earnings.

How much are my monthly pension contributions?

Pension contributions can vary depending on your employer, your pension provider, and whether you are self-employed, work in the private sector, or work in the public sector.

If you have been automatically enrolled in a workplace pension scheme, the minimum contributions are:

(Video) £21,000 Salary After Tax Take Home Pay

The minimum your employer paysYou payTotal minimum contribution
3%5%8%
  • So if you earn £60,000 per year (£5,000 a month), then you pay 5% of your earnings towards a pension, which is £250 per month.
  • Your employer pays an additional 3%, which is £150 per month.
  • In total, you contribute £400 per month towards your pension, but only £250 of this is your money.

This is the standard pension scheme. However, there are many other schemes that you or your employer may have signed you up for, so check to see which one you are a part of.

How much are my student loan repayments?

If you went to university and took out a student loan, then you may also make monthly contributions to your student loan repayment.

The amount you repay each month depends on when you took out the loan and how much you earn.

There are currently four student loan repayment plans:

  • Plan 1
  • Plan 2
  • Plan4
  • Post-graduate Loans

First, you need to figure out which student loan repayment plan you are on and find out whether you are eligible to start paying it.

What student loan repayment plan am I on?

Plan 1

You are on the student loan repayment Plan 1 if you are:

  • an English or Welsh student who started an undergraduate course anywhere in the UK before 1 September 2012
  • a Northern Irish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
  • an EU student who started an undergraduate course in England or Wales on or after 1 September 1998, but before 1 September 2012
  • an EU student who started an undergraduate or postgraduate course in Northern Ireland on or after 1 September 1998

For graduates on the Plan 1 loan repayment, you will only start repaying when your pre-tax income is over £388 a week, £1,682 a month, or £20,195 a year.

Plan 2

You are on the student loan repayment Plan 2 if you are:

  • an English or Welsh student who started an undergraduate course anywhere in the UK on or after 1 September 2012
  • an EU student who started an undergraduate course in England or Wales on or after 1 September 2012
  • someone who took out an Advanced Learner Loan on or after 1 August 2013
  • someone who took out a Higher Education Short Course Loan on or after 1 September 2022

For graduates on the Plan 2 student loan repayments, you will only start repayments when your pre-tax income is over £524 a week, £2,274 a month, or £27,295 a year.

Plan 4

You are on the student loan repayment Plan 4 if you are:

(Video) How to calculate your Income TAX in the UK | Understanding the UK tax system | Salary after tax

  • a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
  • an EU student who started an undergraduate or postgraduate course in Scotland on or after 1 September 1998

For graduates on the student loan repayments Plan 4, you will only start your repayments when your pre-tax income is over £487 a week, £2,114 a month, or £25,375 a year.

Postgraduate Loan

You are on a Postgraduate Loan repayment plan if you are:

  • an English or Welsh student who took out a Postgraduate Master’s Loan on or after 1 August 2016
  • an English or Welsh student who took out a Postgraduate Doctoral Loan on or after 1 August 2018
  • an EU student who started a postgraduate course on or after 1 August 2016

If you took out a Master’s Loan or a Doctoral Loan, you will only start your repayments when your pre-tax income is over £403 a week, £1,750 a month, or £21,000 a year.

How much are the student loan repayments?

Each plan has a threshold for your weekly or monthly income. You repay:

  • 9% of the amount you earn over the threshold for plans 1, 2 and 4
  • 6% of the amount you earn over the threshold for the Postgraduate Loan.

So, a Plan 1 graduate earning £60,000 per year (£5,000 per month), will pay 9% student loan repayments on everything they earn over £20,195 per year, which is £39,805.

9% of £39,805 is £3,582.45.

This means that monthly they will pay back £298.53

Summary

Once you have calculated all of your monthly contributions to Income Tax, National Insurance, pension schemes, and student loan payments, you can then subtract this figure from your monthly wage.

So if you have a gross salary of £60,000 per year (£5,000 per month) pre-tax and pay the minimum pension contribution and are part of the Plan 1 student loan repayment scheme, each month you will take home: £2,917.45.

FAQs

How do I calculate my take home pay monthly? ›

What is the formula for salary calculation? Take Home Salary = Gross Salary - Income Tax - Employee's PF Contribution(PF) - Prof. Tax. Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity. Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service.

How do I calculate my monthly salary UK? ›

Calculating gross monthly wage for annual salary

Example: John receives an annual salary of £30,000 each year from his full-time job as a graphic designer. To calculate John's gross monthly wage, divide his annual salary of £30,000 by 12. John, therefore, has a gross monthly wage of £30,000 / 12 = £2,500.

How do I calculate my take home pay from my salary? ›

Net Salary = Gross salary – All deductions like income tax, pension, professional tax, etc. Net salary is also referred to as Take Home Salary.

How do I calculate my monthly income after taxes? ›

How to calculate net income
  1. Determine taxable income by deducting any pre-tax contributions to benefits.
  2. Withhold all applicable taxes (federal, state and local)
  3. Deduct any post-tax contributions to benefits.
  4. Garnish wages, if necessary.
  5. The result is net income.

What is my monthly salary? ›

Simply take the total amount of money (salary) you're paid for the year and divide it by 12. For example, if you're paid an annual salary of $75,000 per year, the formula shows that your gross income per month is $6,250.

Is tax calculated on basic salary? ›

Tax deducted at source (TDS) on salary

TDS is deducted based on your salary and the investment declarations that you made in the beginning of the year to your employer. Therefore, it's important to make declarations carefully and on time.

How much tax do I pay on 100 weeks UK? ›

Income tax

For £100 earned, you'll be taxed 20% of your taxable income (£66.90). This means you'll pay £13.38.

How much is tax in UK? ›

Income Tax rates and bands
BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £150,00040%
Additional rateover £150,00045%

How do I calculate my gross pay UK? ›

You can calculate your annual gross income by multiplying your monthly income by 12. This only works if you receive regular salary payments each month. For the purposes of this calculation, use your gross monthly income instead of your net monthly income, which is your salary before any deductions.

How can I calculate my salary? ›

Multiply the hourly wage by the number of hours worked per week. Then, multiply that number by the total number of weeks in a year (52). For example, if an employee makes $25 per hour and works 40 hours per week, the annual salary is 25 x 40 x 52 = $52,000.

How is net salary calculated UK? ›

To calculate your after-tax salary in the UK, simply subtract from your gross salary your income tax and National Insurance contributions. UK taxes are paid using the Pay As You Earn (PAYE) scheme, which means your employer will automatically deduct all taxes and contributions from your wages.

How is nett salary calculated? ›

Net pay is take-home pay. It refers to income after accounting for ie. retirement contributions, taxes, and so forth. Taxable income = total income (gross income - exempt income) - allowable deductions + taxable capital gains.

Is monthly income before or after taxes? ›

Gross income for an individual—also known as gross pay when it's on a paycheck—is an individual's total earnings before taxes or other deductions.

What is my net pay after taxes? ›

How do I complete a paycheck calculation? To calculate a paycheck start with the annual salary amount and divide by the number of pay periods in the year. This number is the gross pay per pay period. Subtract any deductions and payroll taxes from the gross pay to get net pay.

How much is 40k a year monthly? ›

Finally, calculate your monthly pay by either taking your salary of $40,000 per year and dividing it by 12 (the # of months in a year) $3,333.33 OR multiplying your daily wage of $153.84 by 21.67 (the average # of workdays in a month).

How do I calculate my tax manually? ›

Now, one pays tax on his/her net taxable income.
  1. For the first Rs. 2.5 lakh of your taxable income you pay zero tax.
  2. For the next Rs. 2.5 lakhs you pay 5% i.e. Rs 12,500.
  3. For the next 5 lakhs you pay 20% i.e. Rs 1,00,000.
  4. For your taxable income part which exceeds Rs. 10 lakhs you pay 30% on entire amount.

What percentage is PAYE tax? ›

How is PAYE worked out? If you earn over the personal allowance pay cap, you'll be charged 20%, 40% or 45% of your earnings, depending on whether you fall under a basic rate, higher rate, or additional rate tax band. This is determined based on your annual income.

At what salary do I pay tax? ›

Any Indian citizen aged below 60 years is liable to pay income tax if their income exceeds 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs. 3 lakhs, they will have to pay taxes to the government of India.

What is a good take home pay UK? ›

The ONS tells us that in April 2021, median weekly earnings for full-time employees went up by 4.3 per cent compared to the previous year, meaning that the average person took home £611 per week, or approximately £31,772 p.a. This is the highest growth since 2008, but adjusted for inflation is still 2.3 per cent lower ...

How much tax do I pay on 100 weeks UK? ›

Income tax

For £100 earned, you'll be taxed 20% of your taxable income (£66.90). This means you'll pay £13.38.

How do you work percentages out? ›

Percentage can be calculated by dividing the value by the total value, and then multiplying the result by 100. The formula used to calculate percentage is: (value/total value)×100%.

What is a good UK salary 2022? ›

Average weekly earnings were estimated at £604 for total pay, and £562 for regular pay, in April 2022. Figure 1 shows that average weekly earnings have steadily increased, with the exception of the early months of the coronavirus (COVID-19) pandemic.

How much do you need to live comfortably UK 2022? ›

The answer is that you need an after tax (net) income of £49,700 in order to live comfortably in the UK as a couple, or £67,554 for a family with 2 parents and 2 children. This figure is based on studies conducted by the Pensions & Lifetime Savings Association and the Child Poverty Action Group.

What salary is middle class UK? ›

According to the Statista report, women aged 18–21 earned £17,005 on average in 2021. The UK median salary for men in the same age group, on the other hand, was £18,392 in 2021.

How much tax gets taken out of a paycheck UK? ›

For England, Wales, and Northern Ireland, your first £12,570 is tax-free. A 20% tax rate is applied up to £50,270, a 40% tax rate up to £150,000, and a 45% tax rate for all additional income. For Scotland, the tax rates differ and can be found on the government's Income Tax in Scotland page.

How much tax do I actually pay UK? ›

Income Tax rates and bands
BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £150,00040%
Additional rateover £150,00045%

What percentage of tax and NI do I pay UK? ›

If you're an employee you start paying National Insurance when you earn more than £242 a week (2022/23). The National Insurance rate you pay depends on how much you earn, and is made up of: 13.25% of your weekly earnings between £242 and £967 (2022/23) 3.25% of your weekly earnings above £967.

How much of your salary is taxed? ›

The federal income tax rates remain unchanged for the 2021 and 2022 tax years: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The income brackets, though, are adjusted slightly for inflation. Read on for more about the federal income tax brackets for Tax Year 2021 (due April 15, 2022) and Tax Year 2022 (due April 15, 2023).

How is PAYE calculated? ›

The following steps are involved in calculating PAYE:
  1. Step 1: Calculate the year-to-date taxable income. ...
  2. Step 2: Calculate the annual equivalent. ...
  3. Step 3: Calculate the tax on the annual equivalent. ...
  4. Step 4: Determine the projected annual tax liability. ...
  5. Step 5: De-annualise the annual tax liability.

What are the tax brackets for 2022? ›

There are seven federal tax brackets for the 2022 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. These are the rates for taxes due in April 2023.

How do you work out percentages without a calculator? ›

Percentages without a calculator - Corbettmaths - YouTube

What is percentage and how it is calculated? ›

How To Calculate Percentage: In Mathematics, a percentage is defined as a number or a ratio expressed as a fraction of 100. Calculating a percentage means dividing the number by the whole and multiplying it by 100. Thus, it can be said that percentage means a part per hundred. The symbol % represents percentage.

How do you calculate percentages on mobile calculator? ›

how to use mobile calculator to take out percentage calculator - YouTube

Videos

1. Calculate 2022-23 UK Income Tax - Using VLOOKUP In Excel
(The Excel Hub)
2. How much salary for good life in UK | Take home salary | Income tax | NI |PF #ukjobs #workvisa #uk
(Travel 4Life)
3. Calculate Your Income With the Best Salary Calculator
(Wealthy Millionaire)
4. Calculating Monthly Net Pay with hours, overall tax rate, and hourly wage.
(B Krawiec)
5. Take Home Pay Calculator and Income Tax Bands UK 2020
(Get Make Digital)
6. Take Home Pay Calculator - Find Your Pay
(dns accountants)

Top Articles

Latest Posts

Article information

Author: Dean Jakubowski Ret

Last Updated: 08/15/2022

Views: 6396

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Dean Jakubowski Ret

Birthday: 1996-05-10

Address: Apt. 425 4346 Santiago Islands, Shariside, AK 38830-1874

Phone: +96313309894162

Job: Legacy Sales Designer

Hobby: Baseball, Wood carving, Candle making, Jigsaw puzzles, Lacemaking, Parkour, Drawing

Introduction: My name is Dean Jakubowski Ret, I am a enthusiastic, friendly, homely, handsome, zealous, brainy, elegant person who loves writing and wants to share my knowledge and understanding with you.