Take home pay calculator

What does your take home pay mean?

Your take home pay (also known as net pay) is the amount of money you receive each month after any deductions have been made to your earnings, like Income Tax and National Insurance.

How is Income Tax calculated?

Income Tax is calculated based on how much you earn, and how much of your income falls into different tax bands. Any of your annual earnings below £12,570 are tax-free, which is called the Personal Allowance.

Any earnings that fall between £12,571 and £50,270 will be taxed at 20% - this is the UK Basic Income Tax Rate. Earnings between £50,271 and £150,000 will be taxed at 40%, and any earnings over £150,001 will be taxed at 45%.

For example, let’s say you earnt £45,000 each year. The first £12,570 would be tax-free, then the remaining amount - £32,430 - would be taxed at the Basic Income Tax Rate of 20%, which is £6,486.

How is National Insurance calculated?

The amount of National Insurance you pay is based on your employment status and how much you earn. It’s calculated using your gross earnings (before tax or pension deductions) or your profits, depending on whether you're employed or self-employed.

There are four main classes of National Insurance:

• Class 1 - paid by employees and employers
• Class 2 - paid if you’re self-employed
• Class 3 - voluntary contribution
• Class 4 - paid if you’re self-employed and have profits over a certain amount

As an employee, you start paying National Insurance on any annual earnings above £12,570. You’ll pay 12% National Insurance for earnings between £12,570 and £50,270 (or weekly earnings between £242 and £967). For any annual earnings over £50,270 (or weekly earnings above £967), you’ll pay 2% National Insurance.

If you're self-employed, you could pay Class 2 and Class 4 National Insurance. For Class 2 contributions, you’ll pay £3.45 a week in National Insurance if your profits are more than £12,570 a year. For Class 4 contributions, you’ll pay 9% National Insurance on profits between £12,570 and £50,270. Any profits above £50,270, you’ll pay 2% National Insurance.

Looking to get on the property ladder?

Whether you’ve started a new job, got a pay rise or want to budget more effectively, our Take Home Pay Calculator will help you work out how much you could put towards a house fund.

If you want to see what you could afford for a mortgage now with your current salary, create a free Tembo plan for a personalised recommendation, or have a play around with our Mortgage Calculator.