Salary & Pay — Page 33

Gross salary minus income tax, National Insurance contributions, pension contributions (if applicable) and student loan repayments gives your net take-home pay. Tax is calculated on your income above the personal allowance (£12,570 for 2026/27) at 20%, 40% or 45% depending on your total income. Use the CalcHub take-home pay calculator for a precise breakdown.

Salary sacrifice lets you give up part of your gross salary in exchange for non-cash benefits (pension contributions, cycle-to-work, electric car). Because your taxable pay is reduced, you pay less income tax and NI. Pension salary sacrifice is particularly tax-efficient, especially for higher-rate taxpayers. Your employer must still pay you at least the National Living Wage.

Statutory redundancy pay is calculated as: 0.5 week's pay per year of service under age 22; 1 week's pay per year between ages 22–40; 1.5 weeks' pay per year aged 41+. The maximum weekly pay for 2026/27 is £643 and the maximum redundancy period is 20 years. Tax is not charged on the first £30,000 of redundancy pay.

SMP is paid for up to 39 weeks: 90% of average weekly earnings for the first 6 weeks, then the lower of £184.03/week or 90% of average weekly earnings for the remaining 33 weeks. You qualify if you have been employed for 26 weeks by the 15th week before your due date and earn at least £123/week. Additional Paternity Leave lets partners share unused leave.

No — overtime is taxed at the same marginal rate as your regular income. It is simply added to your total earnings and tax is applied to the combined total. If overtime pushes your income into a higher band (e.g. above £50,270), the portion above that threshold is taxed at 40%. Use the take-home pay calculator to model the effect of overtime on your net pay.

Plan 1 loans: 9% of income above £24,990. Plan 2 loans (most English/Welsh students from 2012): 9% above £27,295. Plan 5 (new 2023 starters): 9% above £25,000. Postgraduate loans: 6% above £21,000. Deductions are automatic via PAYE and appear on your payslip. Loans are written off after 25–40 years depending on plan.

Legitimate ways to increase net pay include: salary sacrifice into a pension (reduces taxable pay); checking your tax code is correct; using the marriage allowance if your partner earns below the personal allowance; claiming expenses your employer does not reimburse via a P87 form; and maximising your ISA allowance so savings interest is tax-free. Articles in this category cover each option in detail.