Salary and Tax Deductions Calculator

Salary deductions are amounts taken from someone’s pay before they receive their wages. These deductions are usually made by an employer and then paid on to HMRC for things like Income Tax and National Insurance, pension contributions, and student loan repayments. Payslips will show the full original amount of pay, and then itemise each deduction to show the new total.

Gross pay is the total amount of earnings before any salary deductions (such as Income Tax and National Insurance contributions) are taken from it. The take-home amount (also known as net pay) is the amount of pay received once the deductions are made.

Tax codes are issued by HMRC and used by employers to deduct the right amount of tax from your pay. Entering your tax code allows the calculator to give a more accurate idea of how much income tax you will pay on your gross salary, and what your take-home pay will be.

The cost of taking on an employee is more than just their basic salary amount. For example, you might need to make pension and National Insurance contributions as their employer in addition to what to you pay them. Some employers will also offer additional sick or maternity pay, so it’s often useful to have a chat with your accountant and work out what you can afford! Our calculator will show the basic statutory cost of hiring an employee based on their pay.

The calculator works on the basis that you will be able to use the full amount of Employment Allowance for the salary amount you enter. In reality you might have more than one employee (spreading the allowance across your total NI bill), or you might not be eligible to claim it. Talk to the team if you would like more help with this!

This calculator has been set up to work out the take home pay and salary deductions for any employee, but director’s payroll can be a bit different. Our article about finding the most tax-efficient salary as a company director goes into more detail.