How do I work out my monthly take-home pay?

Take your annual salary, subtract income tax, National Insurance, pension contributions, and any student loan repayments, then divide by 12. On a £45,000 salary with 5% pension and no student loan, your monthly take-home is approximately £2,779.

How do I convert a contractor day rate to salary?

Multiply your daily rate by the number of working days per year (typically 220–230). A £500/day contractor working 220 days earns £110,000 gross annually. Inside IR35, your take-home is similar to an employee on £110,000. Outside IR35, you can optimise via salary plus dividends through a limited company.

What does inside vs outside IR35 mean?

IR35 is tax legislation that determines whether a contractor is effectively an employee. Inside IR35: you pay tax and NI like an employee via PAYE. Outside IR35: you can pay yourself a small salary and take the rest as dividends through a limited company, typically resulting in lower overall tax.

How much pension should I contribute?

The auto-enrolment minimum is 5% (employee) plus 3% (employer) = 8% total. Financial advisers often suggest 12–15% total (including employer). Pension contributions are tax-efficient — a 40% taxpayer gets 40p of tax relief for every £1 contributed.

Take-Home Pay Calculator

See your monthly take-home — or convert a contractor daily rate to equivalent salary.

Your salary

Annual salary

Pension contribution

Auto-enrolment minimum is 5%

Student loan plan

Pay frequency

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Tax year 2025/26. England, Wales & Northern Ireland rates.

How to Use This Calculator

Annual tab

Enter your annual salary (gross, before deductions). Add your pension contribution percentage, select a student loan plan if applicable, and choose your preferred pay frequency (monthly, weekly, or four-weekly). The calculator instantly shows your take-home pay after income tax, National Insurance, pension, and student loan repayments.

Contractor tab

Enter your daily rate and the number of working days per year. Select your IR35 status — inside or outside — and add any pension contributions. The calculator adjusts your take-home pay based on how HMRC treats your income under each IR35 scenario.

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The Formula

Your take-home pay is what's left after all statutory deductions are removed from your gross salary.

Take-Home Pay = Gross Salary − Income Tax − National Insurance − Pension − Student Loan

Contractor — inside IR35

If you work inside IR35, you're taxed in the same way as an employee. Income tax, National Insurance, and any other deductions are applied to your gross pay just as they would be for a permanent worker.

Take-Home = Contract Income − Income Tax − NI − Pension − Student Loan
(Same calculation as employed)

Contractor — outside IR35

Outside IR35, you typically pay yourself a small salary up to the Personal Allowance and take the remainder as dividends after corporation tax.

Salary = £12,570 (tax-free Personal Allowance)
Remaining Profit = Contract Income − Salary − Expenses
Corporation Tax = Remaining Profit × 25%
Dividends = Remaining Profit − Corporation Tax
Take-Home = Salary + Dividends (after dividend tax)

Example

Tom — £45,000 salary with pension and student loan

Tom earns £45,000 per year. He contributes 5% to his workplace pension and is repaying a Plan 2 student loan.

Annual tab

Gross salary£45,000

Personal Allowance£12,570

Taxable income£32,430

His deductions break down as follows:

Income tax~£6,486

National Insurance~£2,594

Pension (5%)£2,250

Student loan (Plan 2)~£588

Total deductions~£11,918

Annual take-home~£33,082

Monthly take-home~£2,757

Tom keeps roughly 73.5% of his gross salary. His pension and student loan repayments reduce take-home but build long-term savings and clear his debt.

Contractor — £500/day, inside IR35

A contractor billing £500 per day for 220 working days earns £110,000 gross. Inside IR35, they're taxed as an employee.

Contractor tab

Daily rate£500

Working days220

Gross annual income£110,000

IR35 statusInside

Income tax~£29,432

National Insurance~£5,954

Annual take-home~£70,534

Monthly take-home~£5,878

Inside IR35, the contractor's effective tax rate is significantly higher than an equivalent permanent employee because they don't receive employer benefits such as holiday pay or sick pay.

FAQ

What's the difference between this and the income tax calculator? ▼

The take-home pay calculator focuses on what you actually receive each pay period — after income tax, National Insurance, pension, and student loan repayments are deducted. The income tax calculator focuses on your annual tax breakdown, showing how much tax you owe across each bracket. Use this calculator to understand your monthly or weekly pay; use the income tax calculator to understand your annual tax position.

What's the difference between inside and outside IR35? ▼

IR35 determines how HMRC taxes contractors working through a limited company. Inside IR35 means you're treated as a disguised employee — income tax and National Insurance are deducted at source, just like a permanent worker. Outside IR35 means you're genuinely self-employed and can pay yourself a small salary plus dividends, which is typically more tax-efficient. The client (or agency) decides your IR35 status based on how you work, not what your contract says.

How does salary sacrifice work? ▼

Salary sacrifice is an arrangement where you agree to reduce your gross salary in exchange for a non-cash benefit — most commonly a higher employer pension contribution. Because the sacrificed amount is taken before tax and National Insurance are calculated, you pay less income tax and less NI. Your employer also saves on employer NI contributions. The trade-off is a lower gross salary on paper, which can affect mortgage applications and some benefits. It's one of the most effective ways to boost your pension while reducing your tax bill.

What's a good salary in the UK? ▼

The UK median full-time salary is approximately £30,000. Anything above £45,000 puts you well above average — roughly in the top 25% of earners. In London and the South East, salaries tend to be higher to offset the cost of living. What counts as "good" depends on your location, lifestyle, and financial commitments, but £45,000+ is a comfortable income in most parts of the country.

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