How Our Calculations Work

One source of truth per tax year

All rates, bands and thresholds are held in a central configuration for each tax year. Currently configured: 2026/27, 2025/26, 2024/25. Calculators never contain their own copies of tax figures, so an update to one year's data flows to every calculator, salary page and rates table at once.

Order of calculation for employees

1. Convert the pay you enter to an annual amount (monthly × 12, weekly × 52, hourly × hours × 52).
2. Remove salary sacrifice and net pay pension contributions.
3. Add taxable benefits in kind and other taxable income.
4. Work out the Personal Allowance: standard, tapered above £100,000 of adjusted net income, or taken from the tax code you enter.
5. Apply Income Tax bands for your region. Relief at source contributions extend the band limits.
6. Calculate employee Class 1 NI on pay after salary sacrifice, using your category letter.
7. Calculate student and postgraduate loan repayments on the same earnings.
8. Subtract all deductions to give net pay, then divide by 12, 52, 260 working days and your weekly hours × 52.

Key assumptions

• Pay is steady across the whole tax year and you have one job.
• Income Tax is worked out on an annual basis. NI and loan repayments use annual estimates; payroll uses pay-period thresholds and rounding, so actual deductions can differ even with steady pay.
• With several undergraduate loan plans, repayments use the lowest threshold.
• Relief at source contributions are deducted at 80% of the gross amount. The annual tax estimate includes band-extension relief, which may need to be claimed from HMRC rather than appearing immediately on a payslip.
• Tax codes use an approximate number × 10 allowance. K-code deductions are capped at 50% of cash pay assuming equal payments; this is not a calculation of the final tax liability.

Limitations

We don't model mid-year job changes, week 1/month 1 catch-up, Marriage Allowance transfers unless reflected in the code you enter, savings interest, rental income, the High Income Child Benefit Charge, Blind Person's Allowance, overseas income, or Scottish/Welsh rules for non-standard residency. Business calculators assume a single company, a 12-month period and no reliefs beyond those described on the page.

How to check your result

Compare our annual figures with your P60 or the year-to-date lines on your latest payslip. HMRC's own Income Tax estimator and your Personal Tax Account show the figures HMRC holds for you.

When to talk to HMRC or an adviser

Contact HMRC if your tax code looks wrong, you've been sent a P800 calculation you don't understand, or you think you've under- or overpaid. Consider a qualified accountant or tax adviser for business structures, property, inheritance planning, residency questions, or any decision where a mistake would be expensive.

Testing

Automated regression tests check selected calculation rules and worked examples. These checks are not an independent professional audit of every possible tax situation. Use the official sources and seek advice for cases outside the stated assumptions.

Comparing two estimates fairly

Keep the income period, tax year, region, tax code and deduction options the same. Then compare individual deduction lines before the net total. This helps separate a different assumption from a possible calculation error without treating either estimate as an official assessment.