Work out your take-home pay
Income tax, National Insurance and net pay for any UK salary, 2026-27.
Every UK worker has held the legal right to an itemised payslip since 6 April 2019, and that payslip must show one figure above all others: gross pay, the amount earned before a single deduction is taken [1]. Gross pay is also the first money figure an employer reports to HMRC on every Full Payment Submission, ahead of the tax and National Insurance that follow from it [2]. It is, in short, the number the whole of payroll is built on.
Understanding gross pay matters to every employer, whether a sole director paying one salary or a growing business running a monthly payrun for dozens of staff. It determines how much tax and National Insurance are due, whether a worker qualifies for a workplace pension, and whether a wage clears the National Minimum Wage. Get the gross figure wrong and every calculation downstream is wrong too.
This guide sets out what gross pay means in UK payroll, what it includes and excludes, how it differs from taxable pay and from net pay, and how a single gross figure drives tax, National Insurance, pensions and minimum-wage compliance. It is written for employers running payroll, not for payroll specialists who already know the mechanics.
Key takeaways
- Gross pay is total earnings for a pay period before any deductions, and it must appear on every payslip by law.
- Gross pay is wider than salary: it includes overtime, bonuses, commission, holiday pay and statutory payments.
- Gross pay, taxable pay and gross pay for National Insurance are three different figures that often do not match.
- Net pay is what remains after Income Tax, National Insurance, pension contributions, student loan repayments and other deductions.
- The same gross figure decides auto-enrolment eligibility and whether a wage meets the National Minimum Wage.
What gross pay means
Gross pay is the full amount a worker earns in a pay period before anything is taken off. It is the starting point of the payslip, sitting at the top of the figures, with every deduction applied to it in turn until the net figure, the amount actually paid into the worker's bank account, is reached [1]. HMRC guidance on checking a payslip describes the same structure: gross pay first, deductions next, net pay last [3].
The figure represents everything owed for the work done, not everything the worker keeps. That distinction is the single most common source of confusion on a payslip, because a worker often reads the headline salary as the money they will receive, when in reality it is the money before tax and other deductions reduce it.
Gross pay on a payslip (the legal position)
The right to an itemised pay statement is set out in the Employment Rights Act 1996, which requires every payslip to show the gross amount of wages, the amount and purpose of each variable deduction, and the net amount payable [4]. Since 6 April 2019 that right has extended to all workers, not only employees, and payslips must also show the number of hours worked where pay varies by time worked [1].
An employer must provide the payslip at or before the time wages are paid, and may issue it on paper or electronically [1]. A worker who does not receive a compliant statement can bring a claim at an Employment Tribunal, so showing a correct gross figure is a legal duty rather than a courtesy [4]. Modern UK payroll software generates the itemised statement automatically, which removes the risk of a missing or malformed line.
Gross pay is not the same as salary
Salary is a contractual rate, usually quoted as an annual figure. Gross pay is what is actually earned in a given period, which may be more or less than a simple fraction of the salary. A worker on a £30,000 salary earns a gross figure of £2,500 in an ordinary month, but that gross figure rises in a month with overtime or a bonus, and falls in a month with unpaid leave [3].
For workers paid by the hour rather than on a salary, there is no fixed monthly figure at all. Gross pay is the hours worked multiplied by the rate, plus any additional elements, so it varies with every payrun [1]. This is why the payslip, not the contract, is the authoritative record of what was earned.
What gross pay includes
Gross pay bundles together every element of remuneration for the period, not just basic wages. HMRC requires the full gross figure to be reported on the Full Payment Submission, which captures gross pay alongside the tax and National Insurance that flow from it [2]. Any element the worker is contractually or statutorily entitled to, and that is paid through payroll, forms part of gross pay.
Regular and additional earnings
The components of gross pay fall into a predictable set, and because there are several comparable items they are best set out as a table rather than a list.
| Element | What it is | Part of gross pay |
|---|---|---|
| Basic wages or salary | The core contractual rate for the period | Yes |
| Overtime | Additional hours, at plain or premium rate | Yes |
| Bonuses | Performance, discretionary or contractual bonuses | Yes |
| Commission | Payments tied to sales or targets | Yes |
| Holiday pay | Pay for statutory and contractual leave | Yes |
| Shift and unsocial-hours premiums | Extra pay for difficult hours | Yes |
| Statutory payments | Sick, maternity, paternity and related pay | Yes |
| Reimbursed expenses | Genuine business costs repaid to the worker | No, these are not earnings |
Each earnings element is added before any deduction is applied, so the gross figure is the sum of all of them [1]. Genuine expense reimbursements sit outside gross pay because they return money the worker has already spent, rather than rewarding work [5].
Statutory payments count as gross pay
Statutory payments are part of gross pay even though the state, in effect, funds most of them. Statutory Sick Pay is paid at £123.25 a week, or 80% of average weekly earnings where that is lower, and following the reform that took effect on 6 April 2026 it is due from the first day of sickness with no waiting days and no lower earnings limit [6]. It passes through payroll as gross pay and is taxed and NI-assessed like any other earnings.
The family-related statutory payments work the same way. Statutory Maternity Pay runs at 90% of average weekly earnings for the first six weeks, then at £194.32 a week, or 90% of average weekly earnings if lower, for the remainder [7]. Statutory Paternity, Adoption, Shared Parental, Parental Bereavement and Neonatal Care Pay share the £194.32 weekly rate and all form part of gross pay when paid [7]. An employer that treats statutory pay as somehow separate from gross pay will understate the figures reported to HMRC.
Gross pay, taxable pay and gross for NI: three different figures
One of the hardest ideas in payroll is that an employee does not have a single gross number. The headline gross figure is the total earned, but the amount used to work out Income Tax and the amount used to work out National Insurance are each calculated on their own basis, and the three figures frequently differ [3]. Treating them as interchangeable is a classic payroll error.
| Figure | What it measures | Typical use |
|---|---|---|
| Gross pay | Total earnings for the period | The headline payslip figure and the RTI gross |
| Taxable pay | Earnings subject to Income Tax after pre-tax deductions | Applying the tax code and PAYE rates |
| Gross pay for NI (NIable pay) | Earnings subject to National Insurance | Applying NI thresholds and rates |
The gross figure is reported in full, but PAYE and National Insurance are each applied to their own version of it [2]. Payroll software holds all three figures at once, which is why a hand-run spreadsheet so often goes wrong at exactly this point.
Why taxable pay can be lower than gross pay
Taxable pay is usually lower than gross pay because certain deductions are taken before tax is calculated. A pension contribution under a net pay arrangement comes out of gross pay before the tax code is applied, so it reduces taxable pay while leaving the headline gross unchanged [8]. The worker receives Income Tax relief automatically through the lower taxable figure.
Salary sacrifice goes further still. Under a sacrifice arrangement the worker gives up part of their contractual pay in return for a benefit such as a pension contribution, and HMRC guidance confirms the sacrificed amount reduces both taxable pay and the pay assessed for National Insurance [9]. The payslip must set out the arrangement clearly so the worker can see how the reduced gross is reached [9].
Gross pay for National Insurance
Gross pay for National Insurance is assessed against its own thresholds. In the 2026-27 tax year an employee pays National Insurance at 8% on earnings between the Primary Threshold of £12,570 a year and the Upper Earnings Limit of £50,270 a year, and at 2% above that [10]. The employer pays National Insurance at 15% on earnings above the Secondary Threshold of £5,000 a year, a rate that rose from 13.8% on 6 April 2026 [10].
Because National Insurance is assessed period by period rather than cumulatively, the gross-for-NI figure in a single month can trigger a charge even where the annual pattern would not, which is one reason directors are assessed on an annual basis instead [10]. The interaction between the gross figure and the thresholds is covered in more depth in the Moonworkers guide to employer National Insurance.
From gross pay to net pay: the deductions
Net pay is what is left once every deduction has been taken from gross pay. The payslip must list each variable deduction separately with its purpose, so a worker can trace the journey from the gross figure at the top to the net figure paid into their account [4]. The deductions divide into those required by law and those agreed with the worker.
Statutory deductions
The statutory deductions are the ones an employer must apply, and because there are several with different rates they belong in a table.
| Deduction | Basis in 2026-27 | Applied to |
|---|---|---|
| Income Tax (PAYE) | 20%, 40% or 45% by band in England and Northern Ireland | Taxable pay |
| Employee National Insurance | 8% main rate, 2% above the Upper Earnings Limit | Gross pay for NI |
| Student loan repayment | 9% above the plan threshold (6% for postgraduate loans) | Gross pay above the threshold |
| Workplace pension | Employee minimum of 5% of qualifying earnings | Qualifying earnings |
Income Tax is worked out by applying the worker's tax code to taxable pay, with the standard code of 1257L reflecting the £12,570 Personal Allowance [11]. The basic rate is 20% on income above the allowance up to £50,270, the higher rate 40% up to £125,140, and the additional rate 45% above that [12]. Student loan deductions are taken at 9% of earnings above the relevant plan threshold, with a separate 6% for postgraduate loans, and the thresholds differ by plan [13]. The way these repayments are worked out is set out in the Moonworkers explainer on student loan deductions.
Order and limits on deductions
Deductions follow a defined order and are subject to legal limits. HMRC applies an overriding regulatory limit so that PAYE Income Tax deducted in any single pay period cannot exceed 50% of the gross pay for that period, with any excess carried forward [3]. This protects a worker from a tax code or back-tax situation wiping out an entire wage.
Beyond the statutory deductions, an employer may only make a deduction from wages where it is required by law, permitted by the contract, or agreed in writing by the worker in advance [14]. A deduction that does not meet one of those conditions is unlawful, and the worker can recover it, so the gap between gross and net pay must always be fully accounted for on the payslip [14].
How gross pay drives other payroll calculations
The gross figure does more than feed tax and National Insurance. It is also the trigger for two of the biggest compliance obligations an employer carries: workplace pensions and the National Minimum Wage. Both are assessed against earnings, so an accurate gross figure is the precondition for getting either right [15].
Auto-enrolment qualifying earnings
Auto-enrolment uses a slice of gross pay called qualifying earnings. Contributions are worked out on earnings between the lower limit of £6,240 a year and the upper limit of £50,270 a year, and a worker who earns above the £10,000 earnings trigger must be enrolled automatically [8]. These thresholds are held at the same level for the 2026-27 tax year as the year before [16].
Because eligibility is tested on the gross earnings in each pay period, a worker with variable pay can move in and out of eligibility from one payrun to the next [8]. The mechanics of assessment are explained in full in the Moonworkers guide to auto-enrolment.
Minimum wage checks
The National Minimum Wage is a check on gross pay divided by hours worked. From 1 April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour, the 18-to-20 rate is £10.85, and the rate for workers above school leaving age but under 18, and for apprentices in their first year, is £8.00 [15]. Compliance is tested on the average hourly rate across the pay reference period, not shift by shift [15].
Crucially, some deductions reduce the pay that counts towards the minimum wage. A deduction for a uniform, a tool or any cost that is for the employer's benefit can pull a worker below the legal floor even where the headline gross looks compliant [15]. This is why the gross figure alone is never the end of the minimum-wage question.
Why gross pay matters for RTI and compliance
Gross pay is the figure that anchors Real Time Information. On every payday an employer must send a Full Payment Submission showing gross pay, taxable pay, tax, National Insurance and the other deductions, on or before the day the wages are paid [2]. An incorrect gross figure flows straight into the submission and misstates the employer's liability.
HMRC recognition is the baseline every serious payroll product in the UK holds, and software that carries the HMRC Recognised badge submits the Full Payment Submission automatically with the correct gross, taxable and NIable figures already separated [2]. For an employer, that separation is the difference between a payrun that reconciles and one that does not. Businesses issuing occasional or one-off wages can produce a compliant statement through an instant payslip generator that applies the current rates to the gross figure entered.
Work out the take-home figure from gross pay
An employer sizing a wage or a new hire can turn a gross figure into a net one with the Moonworkers UK salary calculator, which applies the 2026-27 PAYE and National Insurance rules to any gross salary and shows the deductions in order.
£ per month
e.g. 1257L, S1257L, BR, D0
S = Scotland · C = Wales · W1/M1 = non-cumulative
Enter a salary or hourly rate above
About this calculator
This calculator gives you a close estimate of your UK payroll deductions for 2026-27, using HMRC's exact percentage method with periodised thresholds. It handles the three tax territories, K codes with the 50% regulatory limit and its carry-forward, weeks 53, 54 and 56, the cumulative and W1/M1/X bases, student and postgraduate loans, and pension contributions on qualifying earnings. It still won't match your payslip to the penny in every case: it does not cover in-year tax code changes, payrolled benefits in kind, NI deferral across more than one employment, directors on the annual earnings period, or employer-level annual adjustments such as the Employment Allowance and the apprenticeship levy. Powered by the same engine as the Moonworkers Payroll API.
Frequently asked questions
Why might the result differ from my payslip?
This calculator uses your current gross pay and tax code to produce an estimate. K-code carry-forwards and weeks 53, 54 and 56 are handled, and the Year-to-date section reproduces a specific period exactly. What your employer may apply that this does not: a mid-year tax code change, benefits in kind processed through payroll, or NI deferral across more than one employment. For most employees on a standard tax code the difference is negligible.
What tax code should I enter?
Use the tax code shown on your most recent payslip or the PAYE Coding Notice (P2) from HMRC. If you're not sure, 1257L is the standard code for most employees resident in England, Wales, or Northern Ireland. Use S1257L for Scotland or C1257L for Wales if you pay Scottish or Welsh income tax.
Which NI category applies to me?
Most employees use Category A. Use M if you are under 21, H if you are an apprentice under 25, or C if you are over State Pension age. Your employer is responsible for assigning the correct category — if in doubt, check your payslip.
Which student loan plan am I on?
Your plan depends on when and where you studied. Plan 1 covers students who started before September 2012. Plan 2 is for English and Welsh students who started from September 2012 to July 2023. Plan 5 applies to English students who started from August 2023. Plan 4 covers Scottish students. You can check your plan at gov.uk or on your payslip.
What is the YTD cumulative PAYE mode?
HMRC's standard method calculates income tax on your total earnings to date each period, then subtracts tax already paid. If you're mid-year and want to see exactly what tax should be deducted in a specific period, expand the Year-to-date section and enter your running totals from previous periods only.
Conclusion
Gross pay is deceptively simple to state and surprisingly easy to get wrong. It is the total earned before deductions, but it is also the hub that every other payroll figure spins around: the taxable figure after pre-tax deductions, the NIable figure against its own thresholds, the qualifying earnings for a pension, and the hourly rate tested against the minimum wage. A single error in the gross figure ripples through all of them.
For an employer, the practical lesson is that gross pay is not one number to record and forget, but a figure to assemble correctly from every element of a worker's earnings and then carry cleanly into each downstream calculation. As Real Time Information ties reporting ever more tightly to the moment of payment, the employers who stay compliant are the ones whose gross figure is right the first time, every payrun.
Frequently asked questions
Is gross pay before or after tax?
Gross pay is before tax and before every other deduction. It is the total a worker earns for the period, sitting at the top of the payslip, from which Income Tax, National Insurance, pension contributions and any other deductions are then taken to reach net pay. Net pay, the figure after all deductions, is the amount actually paid into the worker's bank account.
Does gross pay include overtime and bonuses?
Yes. Gross pay includes all earnings for the period, so overtime, bonuses, commission, holiday pay and shift premiums are all part of it, on top of basic wages or salary. Statutory payments such as sick pay and maternity pay are also part of gross pay. Genuine reimbursed expenses are not, because they repay a cost rather than reward work.
Why is my taxable pay lower than my gross pay?
Taxable pay is often lower than gross pay because some deductions are taken before Income Tax is calculated. A pension contribution under a net pay arrangement, or an amount given up under salary sacrifice, reduces taxable pay while the headline gross stays the same. The result is that Income Tax is charged on a smaller figure than the total earned.
How is gross pay used to calculate a workplace pension?
Auto-enrolment contributions are worked out on qualifying earnings, which is the slice of gross pay between £6,240 and £50,270 a year for the 2026-27 tax year. A worker earning above the £10,000 trigger must be enrolled automatically. Because the test uses gross earnings in each pay period, a worker with variable pay can qualify in one period and not the next.
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Documentary still life, a printed UK payslip on a wooden office desk beside a calculator, a mug of tea and a pair of reading glasses, soft daylight from a window on the left, late morning, muted palette of warm grey, paper cream, oak and brushed brass, the payslip occupying the lower-right two-thirds of the frame, a brick office wall softly out of focus behind, off-centre composition, shot on a Hasselblad X2D at 55mm f/4, photojournalism, subtle 35mm film grain, no AI artefacts, no warped hands, no warped text, landscape orientation 16:9.
