Why is your figure a pound or two off my payslip?

Almost always rounding. We round once at the end, while HMRC payroll software truncates at intermediate steps for each pay period, so a difference of a pound or two is normal. A larger gap usually means a non-standard tax code, a different pension method, or a student loan that began mid-year.

Do you include employer's National Insurance?

No. Employer National Insurance is a cost paid by the employer, not a deduction from your pay, so it does not affect your take-home. WageReckon only shows what comes out of your own earnings.

Is the calculation approved by HMRC?

No. WageReckon is independent. We transcribe the official HMRC and gov.uk rates and name the source for each, but the tool is not endorsed or approved by HMRC. For anything that affects a decision, check with HMRC or an accountant.

Methodology — How WageReckon Calculates Take-Home Pay

One engine behind every figure

This page sets out exactly how a take-home figure is produced. The calculator and every page run the same engine, so what you read here is what the tool does, and no page can quote a different number from the calculator.

No figure is typed into the prose. Every rate and threshold arrives from a stored dataset that records its HMRC or gov.uk source and the date it was checked, so the words and the maths cannot drift apart.

Income Tax

Income Tax is charged on your taxable income, which is your gross pay minus your Personal Allowance (£12,570). The taxable amount is then walked through the bands: the basic rate (20%) up to the top of the basic band, which on a standard code is £50,270 of gross pay; the higher rate (40%) above that; and the additional rate (45%) at the top. Each rate applies only to the slice of income that falls inside its band, never to the whole salary.

The Personal Allowance is not fixed for higher earners. Above £100,000 it is withdrawn at a rate of one pound of allowance for every two pounds of income, and it is gone entirely by £125,140. Because that lost allowance then becomes taxable, you pay the higher rate on your extra income and, in effect, the higher rate again on the allowance you have just lost. Across the £100,000 to £125,140 band that produces an effective marginal rate of around sixty per cent, well above the 40% headline rate. This stretch is often called the sixty per cent tax trap.

Scotland compared with the rest of the UK

England, Wales and Northern Ireland share three main income-tax bands. Scotland sets its own income tax and uses six: a starter rate (19%), a basic rate (20%), an intermediate rate (21%), a higher rate (42%), an advanced rate (45%) and a top rate (48%).

Only the income-tax bands differ; National Insurance and the Personal Allowance, including its taper, are the same across the UK. A Scottish salary is run through the Scottish bands from the outset rather than adjusted at the end.

National Insurance

National Insurance is separate from Income Tax and is charged on your gross earnings, not your taxable income, so it has no Personal Allowance of its own. Employee Class 1 contributions run at 8% on earnings between the primary threshold (£12,570) and the upper earnings limit (£50,270), and at 2% above the upper earnings limit.

In real payroll, National Insurance is worked out for each pay period rather than across the year, so a single unusual month can make a payslip differ slightly from our annual view.

Student loans

Student loan repayments are a fixed share of the income you earn above your plan's threshold, not of your whole salary. The undergraduate plans repay 9% of income over their threshold: Plan 1 at £26,900, Plan 2 at £29,385, Plan 4 at £33,795 and Plan 5 at £25,000.

The Postgraduate Loan is separate. It repays 6% of income above £21,000 and can run at the same time as an undergraduate plan, so a graduate with both repays on each threshold independently.

Pensions

How a pension contribution affects your tax depends on the scheme, and the three common methods change different bases. Under a net-pay arrangement the contribution comes out of your gross pay before Income Tax is worked out, so it lowers your taxable income directly. Under relief at source the contribution is taken from your pay after tax, the pension provider adds basic-rate relief, and any higher or additional-rate relief is claimed back separately. Under salary sacrifice you formally give up part of your gross salary in exchange for a pension contribution, which reduces both your Income Tax and your National Insurance base.

WageReckon shows which base each method touches so the effect on take-home is clear. For workplace auto-enrolment, an employee is enrolled once earnings reach £10,000, contributions are based on qualifying earnings between £6,240 and £50,270, and the legal minimum is 8% in total, made up of at least 3% from the employer and 5% from the worker.

Dividends

Dividend income is taxed after your other income and on its own set of rates. The first slice is covered by the dividend allowance (£500), which is taxed at nothing. Beyond the allowance, dividends are taxed at 10.75% in the basic band, 35.75% in the higher band and 39.35% in the additional band.

A subtle but important point: the dividend allowance uses up room in your tax band rather than pushing dividends down into a lower band. It shelters the tax on that slice, but those dividends still count towards which band the rest of your dividends fall into.

Rounding, and why a payslip can differ

WageReckon rounds to whole pounds only at the very last step. HMRC payroll software, by contrast, truncates at several intermediate steps as it works through each pay period. Because of that difference in method, a real payslip can legitimately come out a pound or two away from our annual figure.

That small gap is expected and is not an error on either side. Larger differences usually point to something specific, such as a non-standard tax code, a different pension method, or a student loan that started part-way through the year.

Sources and how often we update

Every rate and threshold comes from HMRC or gov.uk and is used under the Open Government Licence v3.0. Each stored figure is tied to the official source page it came from and the date it was checked; the 2026-27 figures were verified on 24 July 2026.

We re-verify the data within five working days of any Autumn Budget or 6 April change, and stamp every page with the date its data was last reviewed, so you can always see how current the numbers are.

The fail-on-mismatch guard

The build has an integrity check that refuses to publish if the stored rates and the figures rendered on the page disagree, or if any figure placeholder has been left unfilled. A number that does not trace back to the dataset simply stops the site from shipping.

It is the safeguard behind the promise on every other page: a wrong or stale figure cannot quietly slip through, because the build stops first.

Rates for the 2026-27 tax year, current as of 24 July 2026. Source: HMRC (gov.uk). Contains public sector information licensed under the Open Government Licence v3.0. Source: HMRC / gov.uk. See how we calculate.

How WageReckon works out your take-home pay