Payroll Calculator — UK PAYE & NI

A full UK payroll calculation applies deductions in a set order, and the order matters because each step changes the base for the next. Gross pay comes first, then any salary sacrifice, which lowers the pay that tax, National Insurance and student loans are all worked out on. A pension paid under a net pay arrangement comes off next, before income tax but not before NI. PAYE income tax is then worked out on the employee's tax code, employee National Insurance on the pay after any sacrifice, and finally a relief at source pension contribution and any student or postgraduate loan repayments come out of what is left. PAYE itself runs cumulatively through the tax year, setting year-to-date earnings against the year-to-date tax-free allowance, so an overpayment in one period corrects itself in the next rather than waiting until the year end.

This calculator works on a monthly pay period, with each annual threshold divided by 12. Enter the annual salary, the tax code, the employee pension percentage and how the scheme takes it (net pay arrangement, relief at source or salary sacrifice), the student loan plan and whether a postgraduate loan is being repaid, and it produces a payslip-style breakdown with every deduction on its own line and the net pay at the bottom, followed by the employer NI and minimum employer pension. Weekly, fortnightly and four-weekly payrolls use the same rates with thresholds divided by 52, 26 or 13, so for those payslips the monthly figures are a guide rather than an exact match.

The 2026/27 figures behind that breakdown start with the income tax bands: nothing on the first £12,570 of personal allowance, 20% to £50,270, 40% to £125,140 and 45% above. Employee Class 1 National Insurance is 8% between £12,570 and £50,270, then 2% on anything higher. Employer Class 1 is 15% on pay above £5,000, a secondary threshold lowered from £9,100 in April 2025. Student loan repayments, pension contributions, salary sacrifice items and any attachment of earnings order sit on top. For a typical British employee, deductions total 20 to 35% of gross pay.

Tax codes carry more information than most payslips explain. 1257L is the standard code for 2026/27 and stands for the £12,570 personal allowance. A K code such as K475 means a negative allowance, usually because taxable benefits like a company car or accommodation exceed the allowance. BR taxes all earnings at the basic rate and normally appears on a second job. 0T applies no personal allowance at all (used when HMRC has no details or the allowance is used elsewhere), the emergency code is 1257L on a week 1 or month 1 basis, and NT means no tax and is rare. M and N mark the two sides of a Marriage Allowance transfer, an S prefix identifies a Scottish taxpayer and a C prefix a Welsh one, currently on the same rates as England but administered separately. The calculator reads all of these, along with D0 and D1, which tax all pay at 40% and 45%, and the Scottish SD0 to SD3 at 21%, 42%, 45% and 48%. Under a K code the tax taken in a pay period can never be more than half of the pay.

Salary is only part of what an employee costs. Employer NI adds 15% of pay above £5,000 and the employer pension at least 3% of qualifying earnings (8% in total with the employee's share), so a £30,000 salary costs £34,462.80 before holiday cover, sick pay or benefits such as private medical cover or a company car are counted. Someone self-employed needs £42k or more of revenue to stand in the same place, having funded their own tax, NI and holiday. Auto-enrolment minimums are 3% from the employer and 5% from the employee, 8% in total, on qualifying earnings between £6,240 and £50,270. The Employment Allowance of £10,500 a year reduces employer NI for eligible small businesses.

Payslips must show gross pay, the tax code, every deduction itemised, net pay and year-to-date totals. Check each month that the tax code matches your P60, that the NI category is right, with A the standard letter, M for employees under 21 and V for veterans relief, that the pension deduction matches what you enrolled in, and that holiday accrual looks sensible. Salary sacrifice items appear as a reduction from gross pay rather than a deduction from net, which is what saves both tax and NI on the amount. A P60 arrives by 31 May after the tax year ends, and a P11D lists benefits in kind.

When something goes wrong, the fix usually runs through HMRC rather than the employer. A wrong tax code is corrected by phoning HMRC on 0300 200 3300 with your National Insurance number and the employer reference, and the new code normally lands within 1 to 2 weeks. Underpaid tax is collected by adjusting the code over future months, or through a Simple Assessment. Overpaid tax comes back through a P800 after the year end or through the current code. Employers have reported on or before each pay date under Real Time Information since 2013, and failures bring fines of £100 to £400 and upwards.