Answers · UK 2025/26
What is the difference between net and gross income in the UK?
Gross income is your total earnings before any deductions. Net income (take-home pay) is what you actually receive after Income Tax, National Insurance, student loan, pension contributions and any other payroll deductions. On a £40,000 salary the net is typically around £31,700/year.
Full answer
UK gross vs net income breakdown 2025/26. Gross income = your contractual salary (or self-employment turnover minus business expenses if self-employed). Deductions applied to gross to reach net (take-home): Income Tax — based on Personal Allowance (£12,570) plus bands (20%/40%/45%); National Insurance — 8% on earnings £12,570-£50,270, 2% above; Student Loan — 9% above your plan's threshold (£26,065-£32,745 depending on plan); Pension contribution — typically 5% (auto-enrolment minimum, can be more); Salary sacrifice — bicycles, EVs, gym, etc; Other — court orders, child maintenance, season ticket loans. Worked example on £40,000: Income Tax £5,486; NI £2,194; Student Loan Plan 2 £1,038; Pension 5% £2,000; Net take-home ~£29,282 (£2,440/month). Same £40,000 with no pension/loan: £5,486 + £2,194 = £7,680 tax, net £32,320 (£2,693/month). Employer cost: employer NI (15% from April 2025 above £5,000 threshold) adds ~£5,250 to true cost. Total employer outlay for £40k gross: ~£45,250.
Try the calculator
More answers
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.