How this is worked out
Three deductions, calculated separately, on different bases.
Income tax. Your personal allowance is subtracted, then the remaining income is taxed marginally through the bands. Above £100,000 the allowance is withdrawn by £1 for every £2 you earn, reaching zero at £125,140 — a detail that creates the highest effective marginal rate in the UK system.
National Insurance. 8% of earnings between the primary threshold and the upper earnings limit, then 2% above. It is not reduced by the personal allowance taper and it is not devolved — a Scottish taxpayer pays Scottish income tax and UK-wide National Insurance, which is why the two sets of thresholds on this page do not line up.
Student loan. A flat percentage of everything above your plan's threshold — 9% on plans 1, 2, 4 and 5, and 6% on a postgraduate loan. The two stack, so a graduate with both repays 15% above two different thresholds.
Pension contributions here are modelled as salary sacrifice or net pay arrangements: taken before income tax is worked out. Relief at source works differently — the contribution comes from taxed pay and the provider reclaims basic-rate relief — so the take-home figure differs slightly.
A worked example
- Gross salary
- £50,270
- Personal allowance
- £12,570
- Taxable income
- £37,700
- Income tax at 20%
- £7,540
- National Insurance at 8%
- £3,016
- Student loan
- £0
- Take-home pay
- £39,714
The 60% tax rate that does not appear on any rate table
Between £100,000 and £125,140 the UK has an effective marginal rate of 60%, and it is nowhere in the published bands. It happens because every extra £1 you earn in that range also destroys 50p of your personal allowance, and that 50p is then taxed at 40%. You pay 40p on the pound itself plus 20p on the allowance you lost — 60p in total.
That is higher than the 45% additional rate that sits above it. Someone on £125,000 is on a higher marginal rate than someone on £200,000, which is genuinely absurd and entirely real.
The practical response is a pension contribution. It reduces the income the taper is measured against, so £1 into a pension in this band effectively costs you 40p — you get 60% relief rather than the 40% a higher-rate taxpayer normally gets. Nowhere else in the system is a pension contribution worth this much. The calculator flags when you are inside the band.
Scotland has six bands, and National Insurance is not one of them
Scottish income tax on earnings is devolved and Scotland uses six bands against three. The practical difference bites earlier than most people expect: the Scottish higher rate of 42% starts at £43,663, while the rest of the UK stays on 20% until £50,270. Someone on £45,000 in Glasgow is on a 42% marginal rate; the same salary in Manchester is on 20%.
National Insurance is not devolved. It is charged at 8% and 2% on the same UK-wide thresholds regardless of where you live, which is why a Scottish payslip shows Scottish income tax and identical National Insurance to an English one.
The crossover is around £30,000: below that, a Scottish taxpayer pays slightly less because of the 19% starter rate; above it, more, and the gap widens steadily. Switch the region above to see both for your own salary.
Your student loan is a graduate tax that happens to have a balance
It is deducted like a tax, calculated like a tax, and for a large proportion of graduates it behaves like a tax: 9% of everything above the threshold, for thirty or forty years, until the balance is written off having never been cleared.
That changes the advice completely. For ordinary debt, overpaying saves interest. For a student loan you will never clear, overpaying is money handed over for nothing — you would have paid the same 9% either way and the write-off arrives regardless. Overpaying only helps if you would otherwise clear the balance before write-off, which generally means high earnings, early.
Plan 5 — English students who started from August 2023 — repays for forty years against thirty on earlier plans, with a threshold frozen at £25,000 until April 2027. That combination means far more graduates will repay in full than under Plan 2.
Why this will not match your payslip exactly
Two structural reasons, both worth knowing. National Insurance is assessed on each pay period rather than on your annual total, so someone whose pay varies — commission, bonuses, overtime — pays more NI across the year than an annual calculation suggests. A single large bonus month can cost noticeably more NI than the same money spread evenly.
And income tax is collected through your tax code, which is a running estimate corrected as the year progresses. A code that is wrong — after a job change, a benefit in kind, or an untaxed source of income — produces a payslip that will not match any calculator. Check the code on your payslip against your Personal Tax Account if the gap is large.
Assumptions and sources
- Income tax rates, allowance and taper
- House of Commons Library briefing CBP-10618, "Direct taxes: Rates and allowances for 2026/27". checked 2026-08
- Scottish income tax bands
- Scottish Government, "Scottish Income Tax 2026 to 2027: technical factsheet". checked 2026-08
- National Insurance
- Class 1 employee: 8% between the primary threshold and the upper earnings limit, 2% above. Not devolved. checked 2026-08
- Student loan thresholds
- House of Commons Library briefing CBP-10654. Plans 1, 2, 4 and 5 at 9%; postgraduate at 6%. checked 2026-08