PAYE tax comparison calculator, 2026/27

How this is calculated

The calculator runs the same salary figure through both the 2026/27 and 2025/26 income tax engines, applying the personal allowance of £12,570, basic rate band to £37,700, higher rate to £125,140 and additional rate above that, for each year in turn. Employee National Insurance is calculated using the 8% rate between the £12,570 primary threshold and £50,270 upper earnings limit, then 2% above it, for both years.

The output is a direct year-on-year comparison of net pay so a director can see whether legislated changes, frozen thresholds, or planned salary increases actually improve their take-home pay in real terms.

Why frozen thresholds matter

Personal allowance and higher rate thresholds have been frozen for several years, which pulls more income into higher tax bands as salaries rise with inflation, an effect often called fiscal drag. Even where headline rates are unchanged between tax years, a pay rise can result in a smaller net increase in take-home pay than expected, because more of the increase is taxed at the marginal rate rather than the basic rate.

This is particularly relevant for directors setting their own salary level each year, as a small increase to keep pace with inflation may look neutral on paper but reduce net pay proportionally once thresholds are compared like this.

Using this for salary planning

Comparing tax years side by side is useful when deciding whether to bring forward a bonus, delay a pay rise to the new tax year, or restructure salary and dividends. Directors close to the personal allowance taper at £100,000, or the additional rate threshold at £125,140, should model both years carefully, as crossing a threshold can have a disproportionate effect on the net benefit of extra salary.

Has the personal allowance changed for 2026/27?

No, the personal allowance remains frozen at £12,570 for 2026/27, continuing the freeze that has applied since 2021/22, which increases the real tax burden as wages rise.

Have employee National Insurance rates changed?

The main employee NI rates and thresholds used in this comparison (8% and 2%, with a £12,570 primary threshold and £50,270 upper earnings limit) are unchanged between the two years shown here.

Why might my take-home pay fall even if my salary rises?

If a pay rise pushes more of your income into the 40% or 45% band, or above the £100,000 taper, the extra tax on that portion can outweigh the benefit of the increase, especially when thresholds are frozen.

Should I compare tax years before agreeing a pay rise?

It is a sensible check, particularly if the rise takes you near a threshold. A small increase in gross salary near £100,000 or £50,270 can result in a much smaller increase in net pay than expected.