Payslip explainer calculator, 2026/27
For anyone puzzled by their own or an employee's payslip, this calculator takes a gross monthly salary and lays out income tax, National Insurance, and net pay for 2026/27 so each deduction is easy to check.
The payslip explainer calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. Assumes even, cumulative pay throughout the year and a standard tax code with the 2026/27 personal allowance of £12,570. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under payroll, paye & employment. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
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Result, 2026/27
Net pay this month
Income tax deducted
Employee National Insurance
Pension + student loan deductions
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
How this is calculated
Gross monthly pay is annualised and pension contributions are deducted first to arrive at taxable pay, reflecting how most workplace pension schemes reduce the income tax calculation. Income tax is then applied using the 2026/27 bands of 20%, 40% and 45%, and employee National Insurance is calculated separately on the full gross salary at 8% and 2% either side of the £50,270 upper earnings limit, because NI, unlike tax, is not usually reduced by pension contributions under a relief-at-source scheme.
Student loan repayments, where applicable, are calculated at 9% of income above the relevant plan threshold and are always based on gross pay, not pay after pension deductions, which is a common source of confusion when reconciling take-home pay.
Reading a real payslip
A standard UK payslip should show gross pay, your tax code, taxable pay, income tax deducted, National Insurance deducted, any pension contribution, any student loan deduction, and net pay, alongside year-to-date totals for each figure. The year-to-date totals are particularly useful for checking cumulative tax codes are working correctly, since HMRC's cumulative basis should smooth out small fluctuations in monthly pay over the year.
If a payslip shows a tax code ending in something other than the standard suffix, or marked as W1/M1 (week 1/month 1), tax is being calculated on a non-cumulative basis, which can lead to over or underpayment that needs correcting later in the year.
When to query a payslip
It is worth querying a payslip if the tax code changes without explanation, if National Insurance appears on pay below the primary threshold, or if a one-off bonus results in an unexpectedly large deduction, which is usually just the marginal tax effect rather than an error, but is always worth double-checking against a calculator like this one.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
Why is my payslip deduction higher this month than last?
This is usually due to a bonus, overtime, or a benefit-in-kind adjustment pushing that month's taxable pay higher, which is taxed at your marginal rate under the cumulative PAYE system rather than spread evenly.
Does pension contribution reduce National Insurance?
Only if it is a salary sacrifice arrangement, where you formally give up salary in exchange for a pension contribution. A standard net pay or relief-at-source pension does not reduce the NI calculation.
What does a W1 or M1 tax code mean on my payslip?
It means tax is calculated on a non-cumulative, week 1 or month 1 basis, ignoring earnings and allowances used earlier in the tax year, often applied temporarily when starting a new job without a P45.
Why is student loan calculated on gross pay, not taxable pay?
Student loan repayments are based on gross pay, before pension deductions under most schemes, which is why the student loan line can seem disproportionately high compared with the income tax line on the same payslip.
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