When considering a new job or negotiating a pay rise, looking at the gross salary doesn’t give you the full picture. What matters is your net take-home pay. Comparing salaries after deductions helps you make informed career choices.
Gross Salary vs Net Take-Home Pay
Gross salary is the headline number before any deductions. Net pay is what is deposited into your bank account. The main deductions in the UK are:
- Income Tax: Collected via PAYE based on your tax code.
- National Insurance (NI): Contributions that qualify you for benefits and state pension.
- Pension Contributions: Auto-enrolment deductions.
- Student Loans: Deducted depending on your study plan.
To run a detailed side-by-side comparison of two job offers, check out our interactive Salary Compare Calculator.
Frequently Asked Questions (FAQ)
Q: Why is my take-home pay lower than expected?
A: Deductions like student loans, workplace pensions, and company benefits (like health insurance or company cars) reduce your net take-home pay.
Q: How does student loan plan affect take-home pay?
A: Plan 1 repayment is 9% over £24,990, while Plan 2 is 9% over £27,295. Repayments are calculated on your gross pay before tax.
Q: Is a salary comparison tool accurate?
A: Yes, our tool uses the official HMRC rates for 2026/27 to model net outcomes, including NI adjustments.
Q: How does a workplace pension affect my tax?
A: Standard pensions are deducted before tax is calculated, reducing your taxable income and lowering your income tax liability.
Q: How do benefits in kind (BIK) affect comparisons?
A: Perks like company cars are taxable, meaning your tax code will be lowered, reducing your net cash pay.