Calculation methodology

Sources

Rates and thresholds are taken from GOV.UK guidance on Income Tax rates and allowances, Scottish Income Tax, employee National Insurance and student loan repayment thresholds for the tax year shown. Each tax year is stored as a separate set of rules, and we only publish a tax year once its figures have been checked.

Order of calculation

• Pay is converted to an annual figure (monthly ×12, four-weekly ×13, fortnightly ×26, weekly ×52, hourly × hours × 52).
• Salary sacrifice reduces pay for Income Tax, NI and student loans. Net pay arrangement contributions reduce pay for Income Tax only. Relief at source contributions are taken from net pay at 80% of the gross amount.
• The Personal Allowance (£12,570) is reduced by £1 for every £2 of adjusted net income above £100,000.
• Income Tax is applied in bands to income above the allowance, using UK or Scottish bands depending on where you live.
• Employee NI (category A) is 8% between £12,570 and £50,270, and 2% above.
• Student loans: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745, Plan 5 £25,000 at 9%; Postgraduate Loan £21,000 at 6%.

Assumptions and limitations

• A standard tax code (1257L, or S1257L in Scotland) and no other income.
• Annual calculations. Payroll calculates NI per pay period and tax cumulatively, so individual payslips can differ — especially with bonuses or irregular pay.
• No benefits in kind, Marriage Allowance, Blind Person's Allowance, childcare vouchers or Self Assessment adjustments.
• Higher-rate relief for relief at source pensions, claimed through Self Assessment, is not included in take-home pay.
• Rounding is to the nearest penny on annual figures.

Testing

The calculation engine is covered by automated test cases including low salaries, basic and higher rate taxpayers, Personal Allowance tapering, Scottish taxpayers, each pension arrangement, student loan plans, Postgraduate Loans and hourly pay conversion. Expected values are worked by hand from the published rates.

Results are estimates and not personal tax advice. For your individual position contact HMRC or a qualified adviser.