Tax calculation methodology

Every calculator on this site runs one statutory engine using versioned rules for each tax year. This page explains the order deductions are applied and the assumptions each result is built on.

Order of deductions

1. Gross salary (and any bonus) is the starting figure.
2. Salary-sacrifice pension contributions reduce the taxable and National Insurance base.
3. Income tax is charged cumulatively across the year using the personal allowance and tax bands.
4. Class 1 employee National Insurance is charged per pay period (monthly) against the primary threshold and upper earnings limit.
5. Student loan and postgraduate repayments are charged per pay period on earnings above each plan's monthly threshold.
6. Net pay is what remains; employer pension contributions and tax relief are added to the pension, not take-home.

Tax years and rate versions

Rules are stored per tax year. Each year's bands, allowances and thresholds come from published HMRC material. Years whose figures are not yet confirmed are marked "(projected)" and are forward-filled from the latest confirmed year until the official rates are announced.

Deduction rules in detail

• Income tax: personal allowance reduces taxable income; England/Wales/NI use 20%/40%/45% bands, Scotland uses its own 19–48% structure. Above £100,000 the allowance tapers by £1 for every £2 of income.
• National Insurance: 8% between the primary threshold and the upper earnings limit, 2% above it. No employee NI below the primary threshold.
• Student loans: 9% above the monthly threshold for Plans 1, 2, 4 and 5; 6% for the postgraduate loan. Thresholds differ by plan and are not the same as the annual figures you may have seen elsewhere.
• Pensions: salary sacrifice lowers both tax and NI; net pay lowers tax only; relief at source adds basic-rate relief to the pot. Employer contributions are shown on top of salary.

Assumptions

• Standard tax code (1257L) and full personal allowance, unless stated.
• No marriage allowance, blind person's allowance or other reliefs.
• Paid evenly every month; a single bonus is taxed in the month it is paid.
• No annual-allowance limits are applied. This site is not advice.

Because each calculator page shows which tax year it uses, and the assumption lists are repeated under each tool, you can always see what a result does and does not include.