What a £5,000 pay rise is worth

Updated for the 2026/27 tax year · Checked 12 November 2026 By the Rodway Labs editorial team · Editorial policy

Updated 12 November 2026 · Tax year 2026/27

Scope: what a rise adds to annual take-home. For one-off payments see the bonus guide.

Checked 12 November 2026 · Tax year 2026/27 · England, Wales or Northern Ireland · No pension · No student loan

A rise on the offer letter is not the same as a rise in the account. Below the higher-rate threshold, income tax takes 20% of the extra pay and employee National Insurance takes 8%. That leaves 72 pence of each extra pound.

Worked example

Alex is paid £30,000 a year in England, with a standard personal allowance, no workplace pension in the model, and no student loan.

• Income tax: 20% × (£30,000 − £12,570) = £3,486.00
• Employee NI: 8% × (£30,000 − £12,570) = £1,394.40
• Take-home: £25,119.60 a year (£2,093.30 a month)

The new role pays £35,000.

• Income tax: 20% × (£35,000 − £12,570) = £4,486.00
• Employee NI: 8% × (£35,000 − £12,570) = £1,794.40
• Take-home: £28,719.60 a year (£2,393.30 a month)

The extra £5,000 of gross becomes £3,600 of take-home (£300 a month). Tax took £1,000 of the rise. NI took £400. £3,600 is 72% of £5,000. Both salaries sit inside the basic-rate band and below the NI upper earnings limit of £50,270, so every extra pound in this particular rise is taxed at 20% and has 8% NI taken off.

A rise that crosses £50,270

The flat 28% does not survive a move through the higher-rate threshold. Take a rise from £48,000 to £55,000 in England, still with no pension and no student loan. £48,000 is under £50,270, so it is still all basic rate. £55,000 is not.

• £48,000: tax £7,086.00 (20% of £35,430), NI £2,834.40, take-home £38,079.60 (£3,173.30 a month)
• £55,000: tax £9,432.00 (20% of £37,700 plus 40% of £4,730), NI £3,110.60 (8% up to £50,270 and 2% on the £4,730 above it), take-home £42,457.40 (£3,538.12 a month)

Gross is up by £7,000. Take-home is up by £4,377.80 (£364.82 a month), not by 72% of £7,000 (that would have been £5,040). Split the rise at £50,270:

• £48,000 to £50,270 is £2,270 still at 20% tax and 8% NI. Tax £454.00, NI £181.60, kept £1,634.40.
• £50,270 to £55,000 is £4,730 at 40% tax and 2% NI. Tax £1,892.00, NI £94.60, kept £2,743.40.

Add those and the deductions are tax £2,346.00 and NI £276.20, which matches £9,432.00 − £7,086.00 and £3,110.60 − £2,834.40. The marginal rate on the second slice is 42% (40% + 2%), not 28%, and not 48%. People sometimes add 40% tax to the old 8% NI and get 48%. Above the upper earnings limit, NI has already dropped to 2%.

What else can shrink a rise

A student loan takes a further slice of the same gross rise: 9% on Plan 1, 2, 4 or 5, or 6% on a postgraduate loan, but only on pay above that plan’s threshold. This page leaves the loan off so the tax and NI split stays visible. A salary-sacrifice pension expressed as a percentage of gross will also grow when the salary grows, which reduces the packet again. Scotland changes the income-tax half only — see Scotland versus the rest of the UK — and does not change the NI half.

Worked example — a rise that crosses £50,270

£48,000 to £53,000, England, Wales or Northern Ireland. The first £2,270 of the rise stays below £50,270 and keeps 72p a pound (20% tax, 8% NI): £1,634.40. The other £2,730 is above it and keeps 58p (40% tax, 2% NI): £1,583.40. Total extra take-home: £3,217.80 a year, or £268.15 a month.

Worked example — a rise into the £100,000 taper

£98,000 to £105,000. The first £2,000 keeps 58p a pound (£1,160.00). Above £100,000, each £2 of income removes £1 of personal allowance, so the next £5,000 is taxed at an effective 60% plus 2% NI and keeps 38p a pound (£1,900.00). Extra take-home: £3,060.00 from a £7,000 rise. Crossing £100,000 of adjusted net income can also end eligibility for Tax-Free Childcare and the extra free childcare hours in England, which can matter more than the tax.

Worked example — the same rise in Scotland

£42,000 to £47,000 in Scotland. £1,662 is still in the 21% intermediate band (keeps 71p a pound) and £3,338 is in the 42% higher band from £43,663 (keeps 50p). Extra take-home: £2,849.02, against £3,600.00 for the same rise in the rest of the UK.

Worked example — with a student loan

£45,000 to £50,000 with Plan 2 or Plan 5. Both plans take 9% of the whole rise because pay is already above both thresholds, so the rise keeps 63p a pound: £3,150.00 instead of £3,600.00. For every plan, the Postgraduate Loan and rises that cross a threshold, see what a pay rise is worth with a student loan.

Edge cases

• Back pay. A backdated rise is taxed when it is paid, through PAYE in that pay period. Over the full tax year the tax is usually the same, but the month it lands can look heavily taxed.
• Child Benefit. If a rise takes adjusted net income above £60,000, the High Income Child Benefit Charge starts: 1% of the benefit for every £200 over, all of it by £80,000.
• Benefits and tax credits. Means-tested benefits such as Universal Credit reduce as earnings rise. This guide does not model them.

Pay rises at different salaries

The same rise is worth less as pay crosses £50,270 (rest of UK), because the marginal deduction moves from 28% to 42%.

Scroll sideways to see the whole table →

With a Plan 2 loan, a further 9% of any rise above £29,385 goes to the loan: a £5,000 rise from £45,000 then adds £3,150.00 instead of £3,600.00.

Run these salaries in the calculator

Sources (checked 12 November 2026): HMRC rates and thresholds for employers 2026 to 2027; GOV.UK Income Tax rates and Personal Allowances. How the figures are worked out: methodology. Figures from the Take-Home Lab engine. National Insurance is modelled on the year.