How much of a UK pay rise you keep depends on the tax band the extra money falls into. For an employee in England, Wales or Northern Ireland whose whole pay rise stays in the basic rate band, 20% goes to Income Tax and 8% to National Insurance, so you keep about 72p of every extra pound. In the higher rate band you pay 40% tax and 2% National Insurance, keeping about 58p. A £4,000 pay rise from £40,000 to £44,000 adds roughly £2,880 to your take-home pay before pension or student loan deductions.
This guide shows the 2026/27 rates, worked examples and the traps that make some raises worth much less than they look.
What are the 2026/27 Income Tax bands?
GOV.UK lists the following rates for England, Wales and Northern Ireland. The government has frozen the Personal Allowance at £12,570 and the higher rate threshold at £50,270 until 5 April 2028, so these bands apply for 2026 to 2027:
- Personal Allowance: up to £12,570, taxed at 0%
- Basic rate: £12,571 to £50,270, taxed at 20%
- Higher rate: £50,271 to £125,140, taxed at 40%
- Additional rate: over £125,140, taxed at 45%
Scotland sets its own Income Tax bands and rates, so a Scottish taxpayer’s raise is taxed differently. Check the Scottish bands on GOV.UK before using the examples below. National Insurance is the same across the UK.
How does National Insurance affect a pay rise?
Employees pay Class 1 National Insurance at 8% on earnings between the primary threshold and the upper earnings limit, and 2% above it, according to GOV.UK. For 2026 to 2027 that is £242 to £967 a week at 8%, and 2% above £967 a week. In annual terms the 8% band ends at roughly £50,270, which lines up with the top of the basic rate band.
That alignment is why the marginal deduction jumps at £50,270: from 20% + 8% = 28% to 40% + 2% = 42%.
What does a pay rise in the basic rate band look like?
Salary rises from £40,000 to £44,000:
- Extra pay: £4,000
- Income Tax at 20%: £800
- National Insurance at 8%: £320
- You keep: £4,000 − £800 − £320 = £2,880
- Per month: £2,880 ÷ 12 = £240
Check your own figures in the UK salary increase calculator.
What if the pay rise crosses into the higher rate band?
Salary rises from £50,000 to £54,000. The first £270 is still in the basic rate band; the rest is in the higher rate band.
- £270 at 28% (20% tax + 8% NI): £75.60 deducted, £194.40 kept
- £3,730 at 42% (40% tax + 2% NI): £1,566.60 deducted, £2,163.40 kept
- Total kept: £194.40 + £2,163.40 = £2,357.80 of the £4,000
The same £4,000 increase is worth about £522 less in take-home pay than in the first example.
Why can a pay rise above £100,000 feel tiny?
GOV.UK explains that your Personal Allowance goes down by £1 for every £2 of adjusted net income above £100,000, so it is gone entirely at £125,140. In that band each extra £1 of income costs 40p in tax plus the loss of 50p of allowance, which is taxed at 40%, another 20p. With 2% National Insurance, the marginal deduction is about 62%. A raise from £100,000 to £110,000 can leave only around £3,800 of the extra £10,000.
Pension contributions made through salary sacrifice or net pay arrangements reduce adjusted net income, which is why many people in this band increase pension saving when they get a raise.
What other deductions take a share of a pay rise?
- Workplace pension: if you contribute a percentage of salary, that percentage of the raise goes to your pension, which is still your money but not take-home pay
- Student loan repayments: Plan 1, 2, 4 and 5 loans take 9% of income above the plan threshold, and postgraduate loans take 6%
- Child Benefit: the High Income Child Benefit Charge claws back benefit as income rises above the threshold
Add these to the tax and National Insurance figures to see the true value of a pay rise.
How should you compare a raise with other offers?
A job offer with a higher salary but a smaller pension match, or a longer commute, can leave you with less real value than a smaller raise from your current employer. Look at the whole package: salary, employer pension contributions, bonus terms, and any costs that come with the move.
Compare offers on take-home pay, not headline salary. Express the raise as a percentage of current pay with the percentage calculator, then convert it to take-home pay using the bands above. If the raise comes with a move or a bigger mortgage, check affordability in the UK mortgage calculator. For a full-year view of tax, the income tax calculator is a useful cross-check.
Does a pay rise ever leave you worse off?
Under Income Tax and National Insurance alone, no: the marginal rate never reaches 100%, so you always keep some of each extra pound. Losses can happen only when a raise pushes you past the limit for a means-tested benefit or support scheme. If you are close to such a threshold, check the rules before you accept, and consider directing part of the pay rise into your pension.
A pay rise is still good news in almost every case. Knowing the band it falls into tells you how much of it will actually reach your bank account. Use the salary tax calculator to compare gross and net pay side by side.
Sources
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: National Insurance, how much you pay
- GOV.UK: Scottish Income Tax
- GOV.UK: Personal Allowance and thresholds from 6 April 2026
FAQ
What does “How Much Do You Keep After a UK Pay Rise?” explain?
How much of a UK pay rise you keep depends on the tax band the extra money falls into. For an employee in England, Wales or Northern Ireland whose whole pay rise stays in the basic rate band, 20% goes to Income Tax and…
How should I use this guide with a calculator?
Read the definitions and assumptions first, then open the linked calculator with the same inputs. Treat results as estimates, not professional advice.
Is this financial or medical advice?
No. Calcenzo content is educational. Confirm important decisions with a qualified professional and official sources for your situation.