Question 1

How is take-home pay calculated in 2025/26?

Accepted Answer

Your take-home pay is your gross salary minus four deductions: income tax (starting at 20%), employee National Insurance (8% on earnings £12,570–£50,270, then 2% above), pension contributions (if applicable), and student loan repayments (if applicable). The personal allowance is £12,570 — you pay no income tax on the first £12,570 you earn.

Question 2

What are the 2025/26 income tax bands?

Accepted Answer

Basic rate 20% applies to taxable income up to £37,700 (gross earnings £12,571–£50,270). Higher rate 40% applies from £50,271 to £125,140. Additional rate 45% applies above £125,140. If your income is over £100,000, your personal allowance tapers — losing £1 of allowance for every £2 over £100,000. This creates a 60% effective marginal rate between £100,000 and £125,140.

Question 3

How much National Insurance do employees pay in 2025/26?

Accepted Answer

Employees pay 8% NIC on earnings between £12,570 (primary threshold) and £50,270 (upper earnings limit), then 2% on everything above £50,270. These are the same rates as 2024/25 — NIC rates were cut from 12%/2% to 10%/2% in January 2024, then again to 8%/2% in April 2024, and remain at 8%/2% for 2025/26.

Question 4

How do pension contributions reduce my tax bill?

Accepted Answer

Employee pension contributions made through your workplace scheme are usually deducted from your gross salary before tax is calculated. This means a 5% pension contribution on a £50,000 salary reduces your taxable income to £47,500 — saving you £500 in income tax if you're a basic rate taxpayer, or £1,000 if you're a higher rate taxpayer.

Question 5

Which student loan plan am I on?

Accepted Answer

Plan 1 applies if you started university before September 2012 in England/Wales, or any time in Northern Ireland. Plan 2 applies if you started from September 2012 in England or Wales. Plan 4 applies if you studied in Scotland. Plan 5 applies to new English students starting from August 2023. Postgraduate loans are separate and charged at 6% above £21,000. Check your Student Loans Company account to confirm your plan.

Question 6

What are the student loan repayment thresholds in 2025/26?

Accepted Answer

Repayments are 9% of earnings above the threshold: Plan 1 — £24,990/year. Plan 2 — £27,295/year. Plan 4 (Scotland) — £31,395/year. Plan 5 — £25,000/year. Postgraduate — 6% above £21,000/year. These are deducted automatically through PAYE alongside your tax and NI.

Take-Home Pay Calculator 2025/26

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