Pay Rise Calculator United Kingdom

Income Tax and National Insurance take a share of every extra pound of a pay rise, and inflation erodes what is left. This calculator looks past the headline percentage to show what a rise is worth: the extra take-home each month and year, and whether it is a real increase once rising prices are counted.

Gross rise versus take-home rise

The percentage your employer offers applies to gross salary, but the increase is taxed at your marginal rate. For a basic rate employee, 20% Income Tax and 8% National Insurance come off, so about 72p of each extra pound reaches you. For a higher rate earner it is 40% tax plus 2% National Insurance on the part above the threshold, leaving 58p. That is why a generous-sounding rise can feel underwhelming, and why comparing job offers on gross salary alone can mislead.

Does your rise beat inflation?

A rise only leaves you better off if it outpaces inflation. If prices rise 3% and your salary rises 3%, you are standing still; a 5% rise is roughly a 2% real gain. The calculator takes the extra take-home and subtracts the amount inflation takes from your current take-home pay. When inflation is high, a nominal rise can turn into a real-terms pay cut, as many UK workers found recently.

Watch the tax thresholds

Income Tax thresholds are frozen, so a pay rise can push part of your income into a higher band, known as fiscal drag. Crossing £50,270 moves the next slice from 20% to 40%; above £100,000 your personal allowance starts to be withdrawn, creating an effective 60% rate up to £125,140. In those ranges a large gross rise delivers a surprisingly small net one. The calculator applies the bands and the taper, so the net figure reflects any threshold you cross.

A worked example

Someone on £40,000 is offered a 5% rise: £2,000 gross, taking the salary to £42,000. After 20% tax and 8% National Insurance, the take-home rise is £1,440 a year, £120 a month. With inflation at 3%, keeping pace with prices costs most of that, leaving a real-terms gain of about £470. A 10% rise on £30,000 adds £2,160 of take-home, and with no inflation all of it is a real gain.

Ways to keep more of a rise

If a rise takes you into a higher band or the personal allowance taper, part of it may be barely worth taking as cash. Pension contributions can help: a salary sacrifice or personal pension payment reduces taxable income, so a higher rate earner can bring a slice back below £50,270, and someone between £100,000 and £125,140 can recover part of their personal allowance, worth about 60p of relief for each £1 contributed. Salary sacrifice can also save National Insurance on the amount sacrificed. The money is locked away until pension age, so it suits longer-term goals. The calculator does not model these options, but it shows the marginal rates that tell you whether they are worth exploring.

Judging an offer and reading the result

The gross rise is what you negotiate, the net rise is what your household gains and the real-terms figure tells you whether you are ahead of the cost of living. When comparing jobs, look past the headline salary to the net rise, and allow for pension matching, bonuses and benefits that this tool does not price. If the real-terms rise is close to zero, that is evidence for asking for more or considering a move. Near a threshold, notice how quickly the net gain shrinks; a slightly larger rise, or directing part of it to a pension, can change the picture.

A rise that starts part way through the tax year affects only the remaining months, so the first year’s gain will be smaller than the full-year figure shown. If an employer offers a choice between a pay rise and a larger pension contribution or other benefit, compare net values: a benefit free of tax and National Insurance can be worth more than a taxed cash rise of the same size.

Assumptions and limitations

This is a planning estimate. It uses 2026/27 Income Tax bands and employee Class 1 National Insurance and applies the personal allowance taper. It treats the rise as a standard salary increase and does not model pension contributions, salary sacrifice, student loan deductions, Scottish Income Tax bands, bonuses or benefits in kind. The real-terms figure uses the single inflation rate you enter as a simple proxy for the cost of living. Tax and National Insurance rates are stored as parameters sourced from HMRC and reviewed each tax year.

About This Pay Rise Calculator

Use this pay rise calculator to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.