GUIDE

What a £5,000 pay rise is worth

Last checked September 2026 · Tax year 2026/27 · England, Wales or Northern Ireland · No pension · No student loan

A rise on the offer letter is not the same as a rise in the account. Below the higher-rate threshold, income tax takes 20% of the extra pay and employee National Insurance takes 8%. That leaves 72 pence of each extra pound in this illustration.

Worked example

Alex is paid £30,000 a year in England, with a standard personal allowance, no workplace pension in the model, and no student loan.

Income tax: 20% × (£30,000 − £12,570) = £3,486.00
Employee NI: 8% × (£30,000 − £12,570) = £1,394.40
Take-home: £25,119.60 a year (£2,093.30 a month)

The new role pays £35,000.

Income tax: 20% × (£35,000 − £12,570) = £4,486.00
Employee NI: 8% × (£35,000 − £12,570) = £1,794.40
Take-home: £28,719.60 a year (£2,393.30 a month)

The extra £5,000 of gross becomes £3,600 of take-home (£300 a month). Tax took £1,000 of the rise. NI took £400.

EXAMPLE Both salaries sit inside the basic-rate band and below the NI upper earnings limit, so the marginal rate on the rise is 28% (20% + 8%). Cross £50,270 and the picture changes: income tax on the extra pound becomes 40% and NI falls to 2%.

Run these salaries in the calculator

What this page does not decide

It does not say Alex should take the job. Hours, commute, pension match and tax code all sit outside the illustration. Check the offer against a real payslip layout before you treat the monthly figure as a budget.

Sources: HMRC rates and thresholds for employers 2026 to 2027; Finance Act 2026 main rates. National Insurance in this example is modelled on the year.