Compare Two Salaries Calculator 2025/26

Enter Two Salaries to Compare

Salary A — Current / Reference

Annual Salary A

£5,000 – £200,000

Enter your current salary or a reference salary

Salary B — New Offer / Pay Rise

Annual Salary B

£5,000 – £200,000

Enter the new salary or job offer to compare

Tax Year

Student Loan Plan

Pension Contribution (%)

I am a Scottish taxpayer (Scottish Income Tax rates apply)

For guidance only. Actual deductions may vary based on your tax code, employer arrangements and individual circumstances.

Is a Pay Rise Always Worth It?

On paper, a higher salary sounds like an obvious win. But once the tax system gets involved, the picture is more nuanced. Understanding marginal tax rates — the rate you pay on each extra pound of earnings — helps you make smarter decisions about job offers, overtime, and salary negotiations.

What Is a Marginal Tax Rate?

Your marginal rate is the combined percentage of tax you lose on your next pound of income. In England, Wales and Northern Ireland, it includes Income Tax and National Insurance. For example, a basic-rate taxpayer earning between £12,570 and £50,270 faces a marginal rate of 32% (20% Income Tax + 12% NI for 2023/24, or 20% + 8% for 2025/26 onwards).

The Impact of Crossing Tax Bands

The most significant marginal rate jumps happen at key thresholds. Once you cross into the higher rate band at £50,270, each extra pound of income is taxed at 40% Income Tax plus 2% NI — a combined marginal rate of 42%. This is why a salary that looks much higher can sometimes produce a smaller net increase than expected.

Example: £50,000 vs £55,000

The £5,000 gross pay rise crosses the higher rate threshold at £50,270. The first £270 is taxed at 28% (basic rate + NI). The remaining £4,730 is taxed at 42% (higher rate + NI). Combined, you might keep only around £3,100 of that £5,000 rise — roughly 62p in every extra pound. Use the calculator above to see your exact figures.

The Personal Allowance Trap

If your income exceeds £100,000, your £12,570 Personal Allowance begins to taper — reducing by £1 for every £2 earned over £100,000. This creates an effective marginal rate of 60% on income between £100,000 and £125,140 in England (in Scotland the effective rates are even higher due to Scottish tax bands). At £125,140 the Personal Allowance is fully withdrawn.

Scotland Has Different Rates

Scottish taxpayers have six income tax bands, with rates ranging from 19% up to 48%. The interaction with UK-wide NI thresholds means Scottish marginal rates can differ significantly from the rest of the UK — particularly around £43,662 where the higher rate kicks in for Scottish taxpayers, well below the £50,270 threshold for the rest of the UK. Tick the "Scottish taxpayer" checkbox above to see the difference.

Pension Contributions Shift the Picture

If your salary crosses a key threshold but you make pension contributions, those contributions reduce your taxable income — potentially bringing you back below the threshold. A higher salary combined with a bigger pension contribution can sometimes put you in a better overall position than the raw numbers suggest.

Worked Examples

The three scenarios below illustrate how much of a pay rise you actually keep at different points on the salary scale.

£35,000 vs £40,000

Extra gross: £5,000

Both salaries sit within the basic-rate band. Marginal rate: 20% IT + 8% NI = 28%.

Extra net take-home: ~£3,050 (61% retention)

Monthly difference: ~£254 extra in your pocket

£49,000 vs £51,000 (crossing higher rate)

Extra gross: £2,000 — but £1,270 sits above the £50,270 threshold.

The slice above the threshold is taxed at 40% IT + 2% NI = 42%.

Extra net: ~£1,040 (52% retention)

Crossing the threshold sharply reduces what you keep

£98,000 vs £102,000 (near PA trap)

Extra gross: £4,000 — crosses the £100,000 PA taper point.

The £2,000 above £100k creates a 60% effective marginal rate (40% IT + 20% IT on withdrawn PA + 2% NI).

Extra net: ~£1,580 (only ~40% retention on the top slice)

Consider a pension contribution to avoid the 60% trap

2025/26 Tax Bands & NI Rates

The tables below show the England and Wales rates used in this calculator. The marginal deduction rates shown include both Income Tax and employee NI combined.

Income Tax Band	Taxable Income	Rate	Combined Marginal Rate (IT + NI)
Personal Allowance	Up to £12,570	0%	0%
Basic Rate	£12,571 – £50,270	20%	28% (20% + 8%)
Higher Rate	£50,271 – £100,000	40%	42% (40% + 2%)
PA Taper Zone	£100,001 – £125,140	40% effective 60%	~62%
Additional Rate	Over £125,140	45%	47% (45% + 2%)

National Insurance (Employee)	Earnings	Rate
Below Primary Threshold	Up to £12,570	0%
Main Rate	£12,571 – £50,270	8%
Upper Rate	Over £50,270	2%

Important Considerations

The £50,270 Cliff Earning even £1 above £50,270 does not push ALL your income into 40% — only the slice above the threshold. But the marginal rate on that slice is 40% IT + 2% NI = 42%. Understanding this means you can negotiate or plan without fearing a cliff edge that does not actually exist.

The £100,000 Trap Salary offers between £100,000–£125,140 look attractive but carry a 60% effective marginal rate due to the Personal Allowance taper. A salary sacrifice pension contribution can reduce your adjusted net income back below £100,000, effectively saving you up to £5,028 in additional tax.

Same Gross ≠ Same Net Two people on identical salaries can have very different take-home pay due to different tax codes, pension arrangements, student loans, benefit-in-kind values or Scottish residency. Always use your own specific details in the calculator rather than relying on general comparisons.

Frequently Asked Questions

How much of a pay rise do I actually keep?

It depends on which tax band your extra income falls into. Basic-rate earners (£12,570–£50,270) keep approximately 72p per £1 of pay rise (20% IT + 8% NI = 28% deducted). Higher-rate earners keep around 58p per £1 (40% IT + 2% NI = 42% deducted). Near £100,000, the Personal Allowance taper reduces retention to as little as 40p per £1. Add student loan repayments of 9% and that can fall further still.

What is the marginal deduction rate?

The marginal deduction rate (MDR) is the combined rate of Income Tax and National Insurance on the next pound you earn. For basic-rate taxpayers in 2025/26 it is 28% (20% IT + 8% NI). For higher-rate taxpayers it is 42% (40% IT + 2% NI). For additional-rate taxpayers it is 47% (45% IT + 2% NI). Between £100,000 and £125,140 the PA taper pushes the effective marginal IT rate to 60%, giving an MDR of approximately 62% when NI is included.

Should I accept a salary above £100,000?

Yes — a higher salary is almost always better than a lower one. However, if your adjusted net income (salary minus pension contributions) sits between £100,000 and £125,140, you face a 60% effective marginal rate on that band. A salary sacrifice pension contribution that brings your adjusted net income back below £100,000 can save thousands in tax. For example, a £5,000 pension contribution at £105,000 adjusted income saves approximately £3,000 in tax.

Why does crossing £50,270 not cost as much as I feared?

Progressive taxation means only the income above the threshold is taxed at the higher rate — not your entire salary. If your salary is £52,000, only the £1,730 above £50,270 is taxed at 40%. Your income below the threshold continues to be taxed at 20%. This is why the "jump" to higher rate is manageable in practice — each extra pound above the threshold costs you 42p in tax and NI, not 42% of your entire salary.

Does pension affect the comparison?

Yes — pension contributions (particularly salary sacrifice arrangements) reduce both your taxable income for IT purposes and your NI-able pay. This means a salary sacrifice pension on a higher salary not only reduces the tax difference between the two salaries but can also bring you back below a key threshold such as £50,270 or £100,000. Always factor in pension when comparing two salary offers, especially if one comes with a higher employer contribution rate.

How accurate is this comparison?

The calculator is highly accurate for standard scenarios — it uses official HMRC band and threshold data, applies the PA taper above £100,000, and models salary sacrifice pensions correctly. Results may differ slightly from real payslips due to payroll rounding, non-standard tax codes (not the default 1257L), benefit-in-kind values, student loan repayment edge cases, or Scottish residency. For complex situations always consult a tax adviser or HMRC directly.

Gross Salary	—
Income Tax	—
National Insurance	—
Student Loan	—
Pension	—
Net Take-Home	—