UK Employee (PAYE) Tax Calculator 2025 – Work Out Your Income Tax & National Insurance
Calculate Your Tax Instantly
Use our free UK tax calculator to estimate your Income Tax and National Insurance contributions (NICs) for the current or the 2025/26 tax year. Simply enter your salary, and we’ll break down how much tax you owe.
Salary
Pension Contribution
| Item | Yearly | Monthly | Weekly |
| Income | |||
| Gross Pay | £0.00 | £0.00 | £0.00 |
| Salary Sacrificed | £0.00 | £0.00 | £0.00 |
| Net Pay | £0.00 | £0.00 | £0.00 |
| Employment Taxes | |||
| Personal Allowance | £12,570.00 | £1,047.50 | £241.73 |
| £0.00 | £0.00 | £0.00 | |
| £0.00 | £0.00 | £0.00 | |
| Total | £0.00 | £0.00 | £0.00 |
| Take Home Pay | £0.00 | £0.00 | £0.00 |
| Pension Contributions | £0.00 | £0.00 | £0.00 |
| Total Compensation | £0.00 | £0.00 | £0.00 |
| Employers Costs | |||
| Salary | £0.00 | £0.00 | £0.00 |
| Employer Pension Contribution | £0.00 | £0.00 | £0.00 |
| Employers NI | £0.00 | £0.00 | £0.00 |
| Total | £0.00 | £0.00 | £0.00 |
How Does UK Income Tax Work?
The UK tax system is progressive, meaning you pay different tax rates on different portions of your income. The main tax bands for 2025/26 are:| Tax Band | Taxable Income | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Your tax-free Personal Allowance may be reduced if your income exceeds £100,000. Bands differ in Scotland.
National Insurance Contributions (NICs)
In addition to Income Tax, most employees and self-employed individuals pay National Insurance. The rates for employees (Class 1 NICs) are:
| Earnings Bracket | NI Rate |
| Up to £12,576 | 0% |
| £12,577 - £50,268 | 8% |
| Over £50,268 | 2% |
How Pension Contributions Affect Your Tax Bill
Contributing to a pension can significantly reduce the amount of tax you pay. Pension contributions receive tax relief, meaning some of your income that would have been taxed is instead invested in your pension, helping your retirement savings grow more efficiently. The way tax relief is applied depends on whether your contributions are made via salary sacrifice, your employer’s pension scheme, or a personal pension plan.
Employer vs. Employee Pension Contributions
Most UK employees are automatically enrolled in a workplace pension scheme if they earn over £10,000 a year and are aged between 22 and the State Pension age. Both you (the employee) and your employer contribute a percentage of your salary into the pension.
- Employer Contributions: Your employer must contribute at least 3% of your qualifying earnings into your pension. Some employers offer higher contributions or match what you put in.
- Employee Contributions: Employees typically contribute at least 5%, bringing the total contribution to 8% of earnings. These contributions receive tax relief, so part of what you would have paid in tax goes into your pension instead.
If you pay into a private or self-invested personal pension (SIPP), tax relief is applied differently, with HMRC adding 20% relief automatically, and higher-rate taxpayers able to claim additional relief via Self Assessment.
Salary Sacrifice Pension Contributions
Some employers offer a salary sacrifice pension scheme, which allows you to contribute to your pension in a more tax-efficient way. Here’s how it works:
- Instead of paying pension contributions from your post-tax salary, you agree to reduce your salary, and your employer contributes the equivalent amount directly into your pension.
- Since your gross salary is lower, you pay less Income Tax and National Insurance (NI).
- Employers also save on NI contributions and may even pass some of these savings on to you.
✅ You pay less tax because your taxable income is lower.
✅ You pay less National Insurance, increasing your take-home pay.
✅ Your employer may add extra contributions since they also save on NI.
Salary sacrifice is generally beneficial for most employees, but it may not be suitable if it lowers your salary below certain thresholds (e.g., affecting maternity pay, mortgage applications, or state benefits).
How Tax Relief Works on Pension Contributions
Pension contributions receive tax relief at your highest rate of tax:
- Basic-rate taxpayers (20%): If you contribute £80, the government adds £20, so £100 goes into your pension.
- Higher-rate taxpayers (40%): You still only contribute £80, but you can claim an extra £20 through Self Assessment, making the total relief £40 per £100 contributed.
- Additional-rate taxpayers (45%): Can claim even more tax relief via their tax return.
This tax relief makes pensions one of the most efficient ways to save for retirement while reducing your annual tax bill.
FAQs – Common UK Tax Questions
- How do I calculate my tax manually?
- What if I am self-employed?
- Do I need to pay tax on a second job?
- Can I reduce my tax bill?
To manually calculate your tax, subtract the Personal Allowance (£12,570) from your salary, then apply the tax bands and rates listed above.
Self-employed individuals pay Income Tax on profits and National Insurance via Self Assessment. You may also need to register for VAT if your turnover exceeds £90,000.
Yes, additional income is taxed at the appropriate rate based on your total earnings across all jobs. You may need to update your tax code with HMRC.
You may be able to reduce your tax liability by:
✅ Contributing to a pension scheme (tax relief applies)
✅ Claiming tax-deductible expenses if self-employed
✅ Using ISA savings accounts for tax-free returns
Why Use Our UK Tax Calculator?
✔️ Instant Results – No complex formulas, just enter your income
✔️ Up to Date – Uses the latest HMRC tax rates
✔️ User-Friendly – Designed for employees, self-employed, and contractors
🔹 Try our tax calculator now!