How to calculate take-home pay by hand
Published 2026-08-29, checked against current rates 2026-08-28.
Take-home pay is gross salary minus income tax, National Insurance, any student loan repayment and any pension contribution, worked out in that order because each deduction uses a different threshold. You can do the whole thing on paper in five steps, and working through it once explains most of what you will later see on a payslip. This guide works through a £42,000 salary in England on the 2026/27 rates (checked 2026-08-28), with a Plan 2 student loan, arriving at £32,624 a year or £2,719 a month. Every figure below is computed with the same engine that powers our calculators, so you can reproduce it exactly. Scottish taxpayers follow the identical method with different bands.
If you just want the answer for your own salary, the calculator does all five steps and shows the working. The method below is for when you want to know why the number is what it is.
Skip the arithmeticStep 1: take off the personal allowance
The first £12,570 of income is taxed at 0%. Subtract it from gross pay to get taxable income: £42,000 minus £12,570 leaves £29,430. If you earn over £100,000 your allowance is smaller than the headline figure, and the personal allowance guide explains how much smaller.
Step 2: apply the tax bands in order
Income tax is charged in slices, and each slice only taxes the money inside it. A common mistake is to think crossing into the higher rate taxes your whole salary at 40%: it does not, it taxes only the part above the threshold.
| Band | Rate | Income taxed | Tax |
|---|---|---|---|
| Basic rate | 20% | £29,430 | £5,886.00 |
| Total income tax | £5,886.00 | ||
Step 3: National Insurance, separately
National Insurance ignores your tax code and your personal allowance. It charges 8% on earnings between £12,570 and £50,270, then drops to 2% above that. On £42,000 the whole amount sits in the main band: £42,000 minus £12,570 is £29,430, and 8% of that is £2,354.40. The rate falling rather than rising at the top is why NI is not progressive in the way income tax is. Our National Insurance calculator handles the weekly and monthly variants payroll actually uses.
Step 4: student loan, if you have one
Student loan repayment is 9% of everything above your plan threshold, and nothing at all below it. On Plan 2 the threshold is £29,385, so the repayment is 9% of £12,615, which is £1,135.35 a year. It is a fixed slice of income above a line rather than interest or tax, so it is simple to work out and easy to forget about. Each plan has a different threshold, so the same salary repays different amounts depending on when and where you studied.
Step 5: pension, and where it sits
Pension is the deduction whose position in the order changes the answer. Under salary sacrifice it comes off before tax and National Insurance are worked out at all; under a net pay arrangement it comes off before tax but after NI; under relief at source it comes off the money you have already been taxed on. Adding a 5% sacrifice to this example puts £2,100 into a pension while take-home falls by only £1,323. The salary sacrifice guide explains why.
Putting it together
| Gross salary | £42,000.00 |
| Income tax | -£5,886.00 |
| National Insurance | -£2,354.40 |
| Student loan (Plan 2) | -£1,135.35 |
| Take-home pay | £32,624.25 |
| Per month | £2,718.69 |
Without the student loan the same salary would take home £33,760, so the loan costs £1,135 a year. You keep 78% of your gross pay overall.
Why does my payslip not match exactly?
Because payroll works monthly, not annually. PAYE gives you one twelfth of your allowance and one twelfth of each band every month, then corrects cumulatively as the year progresses. Any month with a bonus, a change of job, or unpaid leave will differ from the annual figure divided by twelve, and the following months adjust to compensate. If your code carries a W1, M1 or X marker there is no cumulative correction at all, which is the subject of the emergency tax code guide. Rounding also differs: HMRC rounds tax down to the penny and NI to the nearest penny per period, so small discrepancies are normal.
Sources
- gov.uk: income tax rates and personal allowances
- HMRC: rates and thresholds for employers 2026 to 2027
- gov.uk: repaying your student loan
Every figure on this page is computed from those tables at build time, checked 2026-08-28. If a number here ever disagrees with gov.uk, gov.uk is right and this is a bug worth telling us about. See our corrections policy.
Related guides
Gross pay vs net pay: what the difference is
The offer letter figure and the bank figure are never the same number. What comes out in between, and in what order.
How to read your payslip, line by line
Gross, taxable pay, NI letter, YTD columns. What each one means and the four checks that catch a payroll error early.
All 10 guides are listed on the guides index, and every calculator on the home page.