Pay rise calculator

What a pay rise is actually worth once tax and National Insurance have taken their share.

The figure in the letter is gross. What reaches your account is less, and at some salary levels a lot less — a rise crossing £100,000 is worth roughly 40p in the pound.

Used when the rise is a percentage.

Used when you have been given a figure.

The short version

What you keep
Usually 68p in the pound at basic rate and 58p at higher rate, before any student loan.
The 60% band
Between £100,000 and £125,140 the personal allowance is withdrawn, so a rise there is worth about 40p in the pound.
Student loans
Another 9% of the rise above your plan threshold, or 6% on a postgraduate loan. Both if you hold both.
National Insurance falls
Above the upper earnings limit the employee rate drops from 8% to 2%, which softens the higher rate a little.
Scotland differs
Six income tax bands rather than three, and the higher rate starts lower. The same rise is worth less.

Common questions

How much of a pay rise do I actually keep?

At basic rate, about 68p in the pound — 20% income tax and 8% National Insurance. At higher rate it is about 58p, because tax rises to 40% while National Insurance falls to 2%. A student loan takes another 9% on top.

Why is my rise worth so little?

Most often because it crosses a threshold. Moving into higher rate, or into the £100,000 to £125,140 band where the personal allowance is withdrawn, sharply raises the rate on the extra pay. The £100,000 band is the worst: about 40p in the pound kept.

Can a pay rise leave me worse off?

Not from tax alone — you always keep something of every extra pound. It can happen through benefits and childcare: tax-free childcare and 30 free hours are withdrawn entirely once either parent passes £100,000, which is a cliff rather than a taper.

Is a 3% rise good?

It depends on inflation. A 3% rise when prices rose 4% is a real-terms cut. Compare the percentage against CPI for the same period rather than against zero.

Does a pay rise change my tax code?

Not usually. The standard code stays the same and PAYE simply takes more. It changes if you cross £100,000, because the allowance withdrawal is applied through the code.

When does a pay rise show in my pay?

From the pay period it takes effect. If it is backdated you will see the arrears as a lump in one period, which is often taxed more heavily that month and evens out over the year.

What the terms mean

Marginal rate
The tax and National Insurance taken from the next pound you earn, rather than the average across all your pay. It is what decides the value of a rise.
Personal allowance taper
The withdrawal of the personal allowance by £1 for every £2 earned above £100,000, creating an effective rate of about 60% in that band.
Upper earnings limit
The point where employee National Insurance drops from 8% to 2%, close to where higher rate tax begins.
Real-terms rise
A rise measured against inflation. A 3% rise when prices rose 4% is a real-terms cut, whatever the letter says.

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