"Take-home pay," also known as net pay, is the amount of money you receive after all deductions have been taken from your gross salary. Your gross salary is the total amount your employer agrees to pay you annually before any taxes or other contributions are removed. The journey from gross to net involves several key deductions, managed through the UK's Pay As You Earn (PAYE) system.

The two most significant deductions for the majority of employees are:

• Income Tax: This is a tax you pay on your income. Most people are entitled to a "Personal Allowance," which is an amount of income you can earn tax-free each year (£12,570 for 2024/25). Any income above this allowance is taxed in bands at different rates, meaning higher portions of your earnings are taxed at higher percentages.
• National Insurance (NI): These are contributions that pay for certain state benefits, including the State Pension, Jobseeker's Allowance, and Maternity Allowance. The amount you pay is based on your earnings and is calculated separately from Income Tax, with its own set of thresholds and rates.

Other common deductions can include pension contributions (which often provide tax relief), student loan repayments (calculated on earnings above a specific threshold), and salary sacrifice schemes (like cycle-to-work). Our main calculator can help you factor in these additional variables.