How much of your pay rise you keep
A raise is taxed at your marginal rate, the rate on your top slice of income, not your average rate. That’s why a £2,000 rise rarely means £2,000 more in your pocket.
| Pay rise | Extra gross | Extra take-home | You keep |
|---|---|---|---|
| £40,000 → £42,000 | £2,000 | £1,440 | 72% |
| £95,000 → £105,000 | £10,000 | £4,800 | 48% |
The second row crosses into the £100,000 taper, so less than half of the raise survives. In that band a pension contribution is often worth more than the raise itself. The calculator flags it.
Real terms: did you actually get a raise?
Enter the inflation rate (CPI) to see your real-terms change. If prices rise 3% and your take-home rises 2%, your spending power has fallen. Because tax thresholds are frozen until 2031, more of each raise is taxed every year. This “fiscal drag” means you need a bigger rise just to stand still.
Comparing two job offers
Salary is only one part of a package. Compare job offers mode adds up:
- Take-home pay for each salary, with bonus
- Employer pension: 3% vs 8% on a £45,000 salary is £2,250 a year
- Commuting costs: a £4,000 season ticket wipes out a big chunk of a raise
- Hours: dividing by contracted hours gives a value per hour, which is often the deciding number
Adding a second job
Your main job normally gets your Personal Allowance, so a second job is taxed on code BR: a flat 20% from the first pound. NI is worked out separately for each employer, so a small second job often pays no NI at all.
If your main job doesn’t use your whole allowance, for example because it’s part-time, you can ask HMRC to split your allowance between the two jobs. The calculator warns you when that applies.
Cliff edges to watch
Some thresholds cost far more than the tax rate suggests:
- £60,000–£80,000. The High Income Child Benefit Charge claws back Child Benefit.
- £100,000. Tax-Free Childcare and the 30 free hours of childcare are lost completely.
- £100,000–£125,140. A 60% effective Income Tax rate, or 62% with NI.
Salary sacrifice or pension contributions can pull your adjusted net income back under each threshold. Use the take-home pay calculator to see the exact amount needed.
Asking for a raise: useful numbers
When you negotiate, ask for the gross figure that gets you the take-home you want. For a basic-rate taxpayer, divide the extra monthly take-home you want by 0.72 (or 0.63 with a Plan 2 student loan). Wanting £150 more a month means asking for about £2,500 a year.
Frequently asked questions
How much of a pay rise do I keep?
A basic-rate taxpayer in England keeps 72p of every extra £1 (20% tax + 8% NI). With a Plan 2 student loan it's 63p. Between £100,000 and £125,140 you keep only 38p because the Personal Allowance is withdrawn.
Can a pay rise leave me worse off?
Not through Income Tax or NI — your take-home always rises. But crossing £60,000 can trigger the Child Benefit charge and going over £100,000 loses Tax-Free Childcare and free childcare hours, which can cost more than the raise.
How is a second job taxed?
Usually with tax code BR, so all of it is taxed at 20% because your main job uses your Personal Allowance. NI is worked out separately for each job, so you only pay it on a second job above £1,048 a month.
How do I compare two job offers fairly?
Compare take-home pay plus employer pension, minus commuting costs, then divide by the hours you'll actually work. That 'value per hour' often changes which offer looks better.
Why is my pay rise smaller in my bank account than I expected?
Because the whole raise is taxed at your marginal rate (often 28% to 42%), not your average rate. Student loans add 9% more.
Does a pay rise affect my student loan?
Yes. Repayments are 9% of pay above the threshold, so most raises above it increase repayments. See student loan plans.
Is it better to take a pay rise as pension?
For higher-rate taxpayers, or near £60,000 or £100,000, putting part of a raise into your pension via salary sacrifice can be worth far more. See salary sacrifice explained.
Sources
Results are estimates for education and planning, not financial advice. They depend on the figures you enter and the assumptions shown above.