Methodology · 2026/27
How we calculate your pay
A useful estimate needs more than a final number. Here are the steps Pay Unpacked follows, the sources behind them and the circumstances it cannot reproduce.
What the main calculator covers
The salary calculator estimates regular PAYE employment pay for 6 April 2026 to 5 April 2027. It assumes one job with earnings spread evenly over the year and employee National Insurance category A. You can choose monthly or weekly payroll, your UK region, a supported tax code, a pension method and student-loan deductions.
The starting settings are England, monthly pay, tax code 1257L, no pension and no student loan. Salary guide headline figures use those same settings; their calculators can be adjusted for your circumstances.
PAYE Income Tax
We estimate Income Tax for the whole year, then show average monthly and weekly amounts. Contributions through net pay or pension salary sacrifice reduce taxable employment pay. We apply the allowance represented by the tax code and charge each slice of the remaining income at its regional rate, rather than applying the highest rate to all your pay.
The standard Personal Allowance is £12,570. For a standard 1257L estimate, it falls by £1 for every £2 of adjusted net income above £100,000, reaching zero at £125,140. In this model, adjusted net income is salary less the gross pension contribution; other income, Gift Aid and individual HMRC adjustments are not collected.
| Band | Taxable income range | Rate |
|---|---|---|
| Basic rate | Up to £37,700.00 | 20% |
| Higher rate | Over £37,700.00 to £125,140.00 | 40% |
| Additional rate | Over £125,140.00 | 45% |
| Band | Taxable income range | Rate |
|---|---|---|
| Starter rate | Up to £3,967.00 | 19% |
| Basic rate | Over £3,967.00 to £16,956.00 | 20% |
| Intermediate rate | Over £16,956.00 to £31,092.00 | 21% |
| Higher rate | Over £31,092.00 to £62,430.00 | 42% |
| Advanced rate | Over £62,430.00 to £125,140.00 | 45% |
| Top rate | Over £125,140.00 | 48% |
These are taxable-income bands, after the allowance has been deducted. They are not gross-salary bands. See HMRC’s 2026/27 rates and thresholds and GOV.UK’s Personal Allowance guidance.
Tax codes
Numeric L, M, N and T codes use the allowance encoded in the code. BR, D0 and D1 apply a flat rate; 0T removes the allowance; NT removes Income Tax. Scottish and Welsh prefixes select the corresponding region, overriding the region setting if they disagree. Scottish D0 to D3 variants are supported. A custom allowance code is used as issued, so HMRC must already have reflected any allowance taper or individual adjustment in it.
K codes add an amount to taxable pay. We use an annualised cap of 50% of cash gross pay for the steady-pay estimate. Actual payroll applies the K-code limit to each pay period.
W1, M1, X and NONCUM emergency markers are recognised and flagged. The result remains a steady annual estimate: it does not recreate a particular emergency-tax payslip or a cumulative PAYE correction, because earlier pay and tax are not entered. Unsupported codes produce an error rather than being silently replaced.
Tax codes affect Income Tax, not National Insurance. Our tax-code guides explain common codes; HMRC explains what the letters mean.
Employee National Insurance
National Insurance is calculated for each of 12 monthly or 52 weekly pay periods, using category A employee rates. There is no employee contribution up to the primary threshold, 8% between that threshold and the upper earnings limit, and 2% above the upper limit. Pension salary sacrifice reduces the earnings used; ordinary net-pay and relief-at-source pension deductions do not.
| Threshold | Monthly | Weekly |
|---|---|---|
| Primary threshold | £1,048.00 | £242.00 |
| Upper earnings limit | £4,189.00 | £967.00 |
The chosen payroll frequency can therefore change the annual total slightly. Employer National Insurance, other NI categories and directors’ annual NI treatment are outside this calculator’s scope.
Pension contributions
The percentage entered is applied to full gross salary, not qualifying earnings or an employer-specific definition of pensionable pay. The three methods are kept separate:
- Salary sacrifice: the amount given up reduces cash salary before Income Tax, employee NI and loan deductions. The amount is shown separately as going into the pension.
- Net pay: the gross contribution is deducted before Income Tax, but NI and loan earnings are unchanged.
- Relief at source: the percentage is the gross contribution reaching the pension. You pay 80% and the provider adds basic-rate relief of 20% of the gross contribution. For example, a £100 gross contribution costs £80 before any additional relief.
Estimated relief above 20% is included in the annual relief-at-source result where applicable. You may need to claim it from HMRC, so that relief and the monthly average may not appear in your immediate payslip. Extra relief is not estimated for flat-rate tax codes because other income is unknown.
Pension annual-allowance charges, employer contributions, scheme limits and salary-sacrifice effects on benefits are not modelled. Salary sacrifice must not reduce cash pay below the National Minimum Wage. Read GOV.UK’s pension tax-relief guidance, or use the salary-sacrifice calculator to see how giving up part of your salary affects pension funding and take-home pay.
Student and postgraduate loans
Choose one undergraduate plan and, where applicable, a postgraduate loan. Undergraduate repayments are 9% above the plan threshold; postgraduate repayments are 6% above their threshold. We use the official monthly or weekly threshold, round each period’s deduction down to whole pounds, then total the periods. Pension salary sacrifice reduces the earnings used; ordinary pension deductions do not.
| Loan | Annual reference | Monthly | Weekly |
|---|---|---|---|
| Plan 1 | £26,900 | £2,241.66 | £517.30 |
| Plan 2 | £29,385 | £2,448.75 | £565.09 |
| Plan 4 | £33,795 | £2,816.25 | £649.90 |
| Plan 5 | £25,000 | £2,083.33 | £480.76 |
| Postgraduate | £21,000 | £1,750.00 | £403.84 |
The annual column is a reference, not the threshold used for payroll deductions. Outstanding loan balances, stop notices, refunds and combinations of multiple undergraduate plans are not modelled. See HMRC’s loan deduction guidance.
Monthly, weekly, daily and hourly figures
Annual results are the starting point. Monthly figures divide the annual total by 12; weekly figures divide it by 52. These are averages, even if weekly payroll was selected for NI and loans. The main calculator does not currently display daily or hourly take-home figures: those need your paid days and hours, which it does not collect. No standard working day or week is assumed for them.
The hourly-pay tool multiplies gross hourly pay by paid weekly hours and paid weeks to find annual salary. For the reverse conversion, it divides annual salary by those paid hours; monthly salary is multiplied by 12 first. Gross weekly pay divides by paid weeks, while monthly pay and weekly take-home are whole-year averages. Its take-home estimate assumes evenly spread monthly payroll, which can differ from seasonal or unpaid-period payroll. The pro-rata tool multiplies full-time annual salary by your hours divided by full-time hours, then by paid weeks divided by 52. Paid weeks should reflect paid holiday as well as work; term-time contracts may use a different employer formula.
How the other pay tools compare scenarios
The bonus, overtime, pay-rise and salary-comparison tools calculate annual take-home for each scenario and show the difference. They use England, monthly payroll, 1257L and no loans or pension, except for the contribution entered in the salary-sacrifice tool.
The bonus tool compares annual salary with and without the bonus. It spreads total earnings over 12 notional months for NI. A bonus paid in a single month can have a different NI deduction, so this is an annual comparison rather than a prediction of the bonus-month payslip. Irregular overtime can differ for the same reason.
Assumptions and rounding
Inputs resolve to integer pence. Rate calculations discard fractions of a penny. When annual earnings do not divide evenly by 12 or 52, remaining pennies are distributed across the notional periods to preserve the entered annual amount. Loan deductions are then rounded down to whole pounds per period. Displayed amounts are formatted separately, so rounded figures can differ by a penny or pound from an unrounded average.
Calculations assume regular pay throughout the tax year. They do not recreate cumulative payroll tables, earlier jobs, mid-year changes, a 53rd weekly payday, benefits in kind, multiple jobs, self-employment, dividends or other income. Different pensionable-pay definitions and employer rounding can also change a payslip. Check an actual deduction with your employer’s payroll team or HMRC; this is information, not personalised financial or tax advice.
Sources and review dates
The rates and thresholds above were checked against the following official sources on the date shown at the top of this page. That date records a review of the underlying rules; it does not change simply because the site is rebuilt or visited. The review is by Pay Unpacked and does not imply HMRC approval or an independent professional audit.
- GOV.UK — Income Tax rates and Personal Allowances
- HMRC — Rates and thresholds for employers 2026 to 2027
- GOV.UK — Tax codes
- GOV.UK — Student loan repayments
- HMRC — Student and postgraduate loan guidance for employers
- HMRC PAYE11095 — K codes and the deduction limit
- GOV.UK — Pension tax relief
- HMRC PTM044230 — Net-pay pension contributions
- HMRC — Salary sacrifice
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