Salary Increase Calculator UK 2026
Calculate your new salary after a pay rise. See the real take-home impact after tax and NI, compare percentage vs fixed amount increases, and check if your raise beats UK inflation.
Getting a salary increase sounds great until you realise how much of it disappears to tax, National Insurance and other deductions. This free UK salary increase calculator shows you exactly what any pay rise means in real terms: your new gross salary, actual monthly take-home increase, and whether the percentage offered genuinely improves your financial position after inflation.
Most people think a 5% pay rise equals 5% more in their bank account each month. It does not. If you currently earn £35,000 and get a 5% raise (£1,750 gross increase), your actual take-home gain is closer to £1,260 annually after basic rate tax and NI, which works out to just £105 per month. Understanding this gap between gross and net increases matters when evaluating job offers, negotiating raises, or deciding whether to accept a promotion with more responsibility.
This calculator handles both percentage-based increases (like annual 4% raises) and fixed amount bumps (such as £2,500 added to your salary). You can model multiple scenarios side by side, factor in pension contribution changes, account for student loan repayment increases, and see whether your pay rise genuinely beats UK inflation or just maintains your purchasing power. For comparing entirely different job offers including benefits and location factors, use the Job Offer Comparison Tool for a full analysis.
Real Take-Home Impact
See exactly how much extra money lands in your account after tax and NI.
Before vs After Comparison
Visual side-by-side breakdown of current vs new salary with all deductions.
Inflation Adjusted
Check if your raise beats 2026 UK inflation or effectively cuts your real earnings.
Multiple Scenarios
Compare different percentage increases or fixed amounts to find the best option.
When you need this salary increase calculator
- Annual reviews: Evaluate if the percentage offered by your employer is genuinely competitive and fair.
- Job offer negotiations: Calculate whether the proposed salary increase justifies switching employers or roles.
- Promotion decisions: See if the pay bump matches the extra responsibility and hours a new position demands.
- Inflation protection: Check whether your raise maintains purchasing power against rising UK living costs.
- Counteroffer scenarios: Model different increase amounts when negotiating your salary upwards.
- Career planning: Set realistic salary progression targets based on typical industry increase percentages.
- Budget adjustments: Know your exact new monthly take-home to update spending and savings plans.
Calculate Your Salary Increase
Enter your current salary and proposed pay rise to see the real financial impact after all deductions.
How the Salary Increase Calculator Works
This calculator follows standard UK payroll methodology to show the real impact of any pay rise on your take-home earnings. Here is the step-by-step process behind the calculations.
Calculate New Gross Salary
If you entered a percentage increase, the calculator multiplies your current salary by that percentage to find the increase amount, then adds it to your current salary. For example, a 5% raise on £35,000 adds £1,750, making the new gross £36,750. If you entered a fixed amount, that amount is added directly and the percentage is calculated by dividing the increase by your current salary.
Calculate Tax on Both Salaries
Income tax is calculated separately for your current salary and new salary using HMRC 2026/27 PAYE bands. For England, Wales and Northern Ireland: 0% on first £12,570 (personal allowance), 20% on £12,571 to £50,270, 40% on £50,271 to £125,140, 45% above £125,140. Scotland uses six different tax bands from 19% to 48%. The tax code you entered determines your personal allowance.
Calculate National Insurance
National Insurance is calculated at 8% on earnings between £12,570 and £50,270, then 2% on earnings above £50,270. This is done for both your current and new salary. If your pay rise pushes you over the £50,270 threshold, the portion above that level only incurs 2% NI instead of 8%, which slightly improves your net gain on that part of the increase.
Apply Pension Contributions
If you entered a pension percentage, this is applied to both current and new gross salaries. Salary sacrifice pensions reduce your taxable income before tax and NI calculations, saving you money. Relief at source pensions are deducted after tax. The calculator shows how your pension contributions increase proportionally with your salary, and the tax relief you gain on that higher contribution.
Calculate Student Loan Impact
If you have a student loan, the repayment increases by 9% of your pay rise amount (or 6% for postgraduate loans) if your salary is above the threshold for your plan type. Plan 1 threshold is £26,065, Plan 2 is £28,470, Plan 4 is £32,745. A £2,000 pay rise on Plan 2 adds £180 annual student loan repayment (9% of £2,000). This further reduces the net benefit of your salary increase.
Compare Before and After Net Pay
Net pay is calculated by subtracting all deductions (tax, NI, pension, student loan) from gross salary. The calculator does this for both your current salary and new salary, then shows the difference. This net difference is your real take-home increase, which is always lower than the gross increase due to deductions.
Calculate True Percentage Increase
While your gross salary might increase by 5%, your actual net take-home increase will be lower. The calculator divides your net pay increase by your current net pay to show the real percentage gain in your pocket. A 5% gross increase typically becomes a 3.6% to 4.2% net increase depending on your tax situation.
Analyse Inflation Impact
If you entered an inflation rate, the calculator compares your gross percentage increase against that rate. If your raise is below inflation, your real purchasing power actually decreases even though your nominal salary increased. For example, a 3% raise when inflation is 4% means you can buy 1% less than before despite earning more pounds.
Calculation Accuracy: This salary increase calculator uses official HMRC 2026/27 tax rates and standard payroll methodology. Results are accurate for typical employment situations. Some complex scenarios (emergency tax codes, cumulative adjustments, benefits in kind, multiple jobs) may produce slightly different real-world results. Always verify against your actual payslip when you receive the increase.
Real Example: Rebecca, Marketing Manager in Birmingham
Rebecca's Situation
- Current Salary: £42,000 per year
- Pay Rise Offered: 6% (annual review)
- Tax Code: 1257L (standard)
- Region: England
- Pension: 5% salary sacrifice
- Student Loan: Plan 2
- UK Inflation: 2.5% (2026)
Salary Increase Calculation
Step 1: Calculate Gross Increase
6% of £42,000 = £2,520
New gross salary: £42,000 + £2,520 = £44,520
Step 2: Current Salary Deductions
- Pension (salary sacrifice): £42,000 × 5% = £2,100
- Taxable income: £42,000 - £2,100 = £39,900
- Income tax: (£39,900 - £12,570) × 20% = £5,466
- National Insurance: (£39,900 - £12,570) × 8% = £2,186.40
- Student loan (Plan 2): (£42,000 - £28,470) × 9% = £1,217.70
- Current annual net: £42,000 - £2,100 - £5,466 - £2,186.40 - £1,217.70 = £31,029.90
- Current monthly take-home: £2,585.83
Step 3: New Salary Deductions
- Pension (salary sacrifice): £44,520 × 5% = £2,226
- Taxable income: £44,520 - £2,226 = £42,294
- Income tax: (£42,294 - £12,570) × 20% = £5,944.80
- National Insurance: (£42,294 - £12,570) × 8% = £2,377.92
- Student loan (Plan 2): (£44,520 - £28,470) × 9% = £1,444.50
- New annual net: £44,520 - £2,226 - £5,944.80 - £2,377.92 - £1,444.50 = £32,526.78
- New monthly take-home: £2,710.57
Results Analysis
Gross Increase: £2,520 (6%)
Net Increase: £1,496.88 annually (£124.74 monthly)
True Net Percentage Increase: 4.8%
Deductions on Increase: £1,023.12 (40.6% of the raise)
Inflation Comparison: 6% raise vs 2.5% inflation = Real gain of 3.5%
Rebecca's 6% pay rise sounds substantial, but 40.6% disappears to tax, NI, pension and student loan increases. She keeps £1,496.88 net annually, which is £124.74 extra per month. However, her raise comfortably beats 2.5% inflation, increasing her real purchasing power by 3.5%. If she had no student loan, her net increase would be £1,723.58 (£143.63 monthly). To see whether this raise matches market rates for marketing managers, she could check the UK Salary Benchmark tool.
Salary Increase Calculator FAQs
How do I calculate a 5% salary increase?
Multiply your current salary by 0.05 (which represents 5%) to find the increase amount, then add it to your current salary. The formula is: New Salary = Current Salary + (Current Salary × 0.05).
For example, if you currently earn £30,000:
- Increase amount: £30,000 × 0.05 = £1,500
- New gross salary: £30,000 + £1,500 = £31,500
However, your actual take-home pay increase will be significantly lower than £1,500 because the extra earnings are subject to income tax and National Insurance. At basic rate (20% tax plus 8% NI), you would pay £420 in deductions on that £1,500 increase, leaving you with approximately £1,080 extra net per year, which is £90 per month. The exact amount depends on your personal tax situation, pension contributions and whether you have student loans.
What is a good salary increase percentage in the UK?
A typical UK salary increase ranges from 3% to 6% annually depending on circumstances:
- Inflation-matching raises: 2.5% to 3.5% in 2026 to maintain purchasing power
- Standard annual reviews: 3% to 5% for satisfactory performance
- Performance-based increases: 5% to 8% for strong performers
- Promotions: 10% to 15% when moving up a level with new responsibilities
- Job switches: 10% to 20% when changing employers (typical external hire premium)
In 2026, with UK inflation around 2.5%, any raise below 3% effectively reduces your real earnings when accounting for rising costs. A 4% to 5% increase both maintains purchasing power and rewards your contribution. Anything below inflation is essentially a pay cut in real terms, even though your nominal salary goes up.
Industry and sector matter significantly. Tech, finance and consulting often see 6% to 10% annual raises for high performers, while public sector and retail typically offer 2% to 4%. Check sector-specific benchmarks using the UK Salary Benchmark to understand what is competitive for your role and location.
How much will my take-home pay increase after a pay rise?
Your net take-home increase depends entirely on your tax bracket and other deductions. Here is what happens to a gross pay rise at different income levels:
Basic rate taxpayers (earning £12,571 to £50,270):
- Income tax: 20% of the increase
- National Insurance: 8% of the increase
- Total deductions: 28% (plus pension and student loans if applicable)
- You keep: approximately 72% of the gross increase
- Example: £3,000 gross raise becomes £2,160 net (£180 per month)
Higher rate taxpayers (earning £50,271 to £125,140):
- Income tax: 40% of the increase
- National Insurance: 2% of the increase
- Total deductions: 42% (plus pension and student loans)
- You keep: approximately 58% of the gross increase
- Example: £5,000 gross raise becomes £2,900 net (£242 per month)
Additional factors that reduce your net gain:
- 5% salary sacrifice pension adds 5% to deductions (but saves tax and NI on that amount)
- Student loan Plan 2 adds 9% on earnings above £28,470
- Crossing from basic to higher rate tax means the portion above £50,270 loses 42% instead of 28%
Use this calculator to see your exact net increase based on your specific circumstances including pension type, student loans, and tax code.
Should I negotiate a percentage or fixed amount salary increase?
The better option depends on your current salary level and negotiating position:
Percentage increases work better when:
- You have a higher base salary (percentages yield larger amounts)
- You want future raises to compound on this increase
- Industry standards are quoted in percentages (e.g. "typical 5% annual increase")
- You are negotiating annual review increases rather than promotions
Example: 5% of £50,000 is £2,500, but 5% of £30,000 is only £1,500. The same percentage gives vastly different amounts.
Fixed amount increases work better when:
- You have a lower base salary and the percentage would sound unreasonably high
- You are negotiating a promotion or significant role change
- You know the market rate for the new position and need a specific amount to reach it
- The percentage equivalent would exceed typical organisational caps (e.g. asking for 20%+)
Example: Asking for £8,000 more sounds more reasonable than asking for 27% when your current salary is £30,000, even though they are the same amount.
Pro tip: Calculate both before negotiations. If you want £4,000 more and currently earn £32,000, that is 12.5%. Present whichever sounds more compelling given your organisation's culture and your justification. Use the Salary Negotiation Calculator to model different scenarios and build your case.
How does a salary increase affect my tax code and deductions?
A salary increase does not automatically change your tax code, but it affects how much tax and other deductions you pay in several ways:
Income Tax Impact:
- Your tax code (e.g. 1257L) stays the same, which gives you the same £12,570 personal allowance
- If your new salary stays within the same tax band, you pay the same rate on the increase (20% or 40%)
- If your new salary crosses £50,270, earnings above that threshold move from 20% to 40% tax
- If you exceed £100,000, your personal allowance reduces by £1 for every £2 over, disappearing entirely at £125,140
National Insurance Changes:
- Earnings between £12,570 and £50,270 incur 8% NI
- Earnings above £50,270 incur only 2% NI
- If your raise pushes you over £50,270, the portion above that threshold saves 6% in NI (8% drops to 2%)
Student Loan Repayments:
- Plan 1 (threshold £26,065): You repay 9% of your salary increase if above threshold
- Plan 2 (threshold £28,470): You repay 9% of your salary increase if above threshold
- Plan 4 (threshold £32,745): You repay 9% of your salary increase if above threshold
- Postgraduate (threshold £21,000): You repay 6% of your salary increase if above threshold
Pension Contributions:
- If you have a percentage-based pension (e.g. 5%), your contribution increases proportionally
- 5% of your new higher salary means slightly more into your pension each month
- Salary sacrifice pensions save tax and NI on the increased contribution amount
- You receive tax relief at your marginal rate (20% or 40%) on increased pension payments
Your tax code only changes if HMRC adjusts it for other reasons (benefits in kind, multiple jobs, tax debts). The salary increase itself does not trigger a tax code change.
Data Sources & Calculation Accuracy
This UK salary increase calculator implements official HMRC tax and National Insurance methodology for the 2026/27 tax year (6 April 2026 to 5 April 2027). All rates and thresholds are sourced from HMRC published guidance to ensure accurate before-and-after salary comparisons.
Official HMRC Tax Sources
- HMRC Income Tax Rates 2026/27: Personal allowance £12,570, basic rate 20% (£12,571 to £50,270), higher rate 40% (£50,271 to £125,140), additional rate 45% (above £125,140).
- Scottish Income Tax Rates: Six progressive bands from 19% starter rate to 48% top rate applied to Scottish residents only.
- National Insurance Thresholds: Primary threshold £12,570, upper earnings limit £50,270, employee rates 8% and 2%.
- Student Loan Thresholds: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745, Postgraduate £21,000, with 9% repayment rate (6% for postgrad).
- Personal Allowance Taper: Reduces by £1 for every £2 earned over £100,000, fully removed at £125,140.
Primary Reference: GOV.UK Income Tax Rates and Allowances
How Calculations Work
- Percentage increase: New Salary = Current Salary × (1 + Percentage/100)
- Fixed amount increase: New Salary = Current Salary + Fixed Amount
- Tax calculated separately on current and new salaries using progressive PAYE bands
- National Insurance calculated on both salaries with 8% and 2% thresholds
- Pension contributions applied before or after tax depending on scheme type
- Student loan repayments calculated as 9% of income above plan threshold
- Net increase = (New Net Salary) minus (Current Net Salary)
- True percentage increase = (Net Increase / Current Net Salary) × 100
Calculation Limitations
- Timing Assumptions: Calculator assumes the increase applies for a full tax year. Mid-year changes may have different cumulative tax treatment.
- Benefits in Kind: Company cars, private medical insurance, gym memberships and other taxable benefits are not included.
- Bonus and Commission: One-off payments or variable earnings are not factored into this salary comparison.
- Emergency Tax: New jobs or changes sometimes trigger emergency tax codes (BR, 0T) which are not modelled here.
- Childcare Vouchers: Salary sacrifice schemes for childcare or other benefits beyond pension are not included.
- Multiple Jobs: Tax codes and personal allowance split differently across multiple employments.
Disclaimer: This free salary increase calculator provides estimates for planning and negotiation purposes. It is not a substitute for professional financial advice or official HMRC guidance. While the tool uses official tax rates and standard payroll methodology, your actual take-home pay change may differ due to employer-specific circumstances, tax code adjustments mid-year, or personal situations not covered here. Always verify the real impact against your actual payslip when your salary increase takes effect. FastJobs UK accepts no liability for financial or career decisions made based on these estimates.
Privacy & Data Handling
This UK salary increase calculator runs entirely in your browser using JavaScript. No salary information, pay rise details, or personal tax data is sent to any server, stored in any database, or shared with third parties.
What We Do NOT Do
- Store your current salary, new salary, or increase amounts in any database
- Share your pay rise information with HMRC, employers, or anyone else
- Track individual calculations or create user profiles
- Require email addresses, registration, or login to use the tool
- Use cookies specific to this calculator (general site analytics may apply)
- Sell or monetise your salary data in any way
How Calculations Work
- All calculations happen in your browser using client-side JavaScript
- Your salary inputs are processed locally on your device only
- Results appear instantly without any server communication
- Close the tab and all data disappears from your session
- No permanent record of your salary or calculations exists anywhere
- Anonymous usage statistics may be collected (e.g. total calculations performed) but never linked to specific salaries or individuals
For general website privacy including advertising and analytics, see the main FastJobs UK privacy policy. This salary increase calculator itself adds no extra tracking and never stores your financial information.