If a job advert says £35,000 and about £2,393 reaches your bank account each month, nothing has gone wrong. The first number is your gross pay. The second is your net pay, usually called take-home pay. The gap between them is made up of tax, National Insurance and other deductions.
This guide explains the difference, shows what comes off your pay and works through a full example using the 2026/27 rates. The figures are for England, Wales and Northern Ireland and come from GOV.UK.
What is the difference between gross pay and net pay?
Gross pay is what you earn before anything is taken off. Net pay is what is left after deductions, and it is the amount that is paid into your bank account.
What is gross pay?
Gross pay is your total earnings for a pay period: salary or hourly wages, plus overtime, bonuses and commission. A salary quoted in a job advert or contract is a gross figure.
What is net pay?
Net pay is your gross pay minus income tax, National Insurance, any pension and student loan payments, and other deductions. You will also see it called take-home pay or net earnings.
| Gross pay Net pay | ||
| What it is | Earnings before deductions | Earnings after deductions |
| Where you see it | Job adverts, contracts and the top of your payslip | The bottom of your payslip and your bank account |
| What it is used for | Comparing job offers and negotiating pay | Budgeting for rent, bills and savings |
| What changes it | A pay rise, promotion or change in hours | All of those, plus tax code, pension and student loan changes |
Where to find each on your payslip
Most payslips follow the same order. Gross pay is listed near the top, followed by the deductions (income tax, National Insurance, pension and so on), and net pay is the figure at the bottom, which matches the amount paid into your account.
How to work out your take home pay
The quickest way to find your take home pay is to use a take home pay calculator, but the sum is simple enough to do by hand once you know the steps.
The formula
Net pay = gross pay minus income tax, National Insurance, pension, student loan and other deductions
Step by step
- Start with your gross pay for the year, or for the month if you prefer to work monthly.
- Find your taxable income. For most people this is gross pay minus the £12,570 Personal Allowance.
- Apply the income tax rates to your taxable income.
- Work out National Insurance on your earnings above £12,570.
- Subtract pension, student loan and any other deductions. What is left is your net pay.
What comes off your gross pay
Income tax
For the 2026/27 tax year you can earn £12,570 before paying any income tax. Above that, the rates are 20% on taxable income up to £50,270, 40% up to £125,140 and 45% above that. The Personal Allowance is reduced by £1 for every £2 of adjusted net income over £100,000. Scotland has its own income tax bands, so the figures here will differ if you live there. The current rates are published on GOV.UK income tax rates.
National Insurance
Most employees pay Class 1 National Insurance in category A. The rate is 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. It is calculated separately from income tax. The full list of rates and categories is on GOV.UK National Insurance rates.
Workplace pension
Most employees are enrolled in a workplace pension, and their contribution comes out of pay. How it affects your tax depends on how your employer’s scheme works: in many schemes the contribution is taken before income tax, which lowers the tax you pay. Check your payslip or ask your payroll team.
Student loan
If you have a student loan, repayments are taken through payroll once you earn above the threshold for your plan. The amount depends on your plan and your income.
Other deductions
Some employees also see deductions for things like a cycle to work scheme, a season ticket loan, union fees or charitable giving through payroll.
Worked example: a £35,000 salary in 2026/27
Assumptions
This example assumes an employee in England with the standard tax code 1257L, no pension and no student loan.
The calculation
| Step Calculation Amount per year | ||
| Gross salary | £35,000.00 | |
| Taxable income | £35,000 minus £12,570 Personal Allowance | £22,430.00 |
| Income tax | 20% of £22,430 | £4,486.00 |
| National Insurance | 8% of (£35,000 minus £12,570) | £1,794.40 |
| Net pay | £35,000 minus £4,486.00 minus £1,794.40 | £28,719.60 |
What the result shows
Divided by 12, that is £2,393.30 a month, or about 82% of the gross salary. A pension contribution or student loan repayment would lower the take-home figure further.
Why your take-home pay is lower than the advertised salary
Tax and National Insurance come out first
Job adverts quote gross pay, and a good part of it never reaches you: income tax and National Insurance are taken before the money is paid. In the example above, £6,280.40 of the £35,000 goes in tax and National Insurance alone.
Why net pay can change while gross pay stays the same
A new tax code, a higher pension contribution or starting to repay a student loan all change what is deducted. If your take-home pay drops and you do not know why, compare the tax code on your payslip with the one HMRC has for you, and ask your payroll team or an accountant to explain the difference.
Gross or net: which figure to use
Comparing job offers and negotiating pay
Use gross, because that is how employers quote and contract pay. Then work out a net for each offer to see what you would actually receive. Your net pay follows from your tax code and deductions, so it is not the figure to negotiate on.
Budgeting
Use the net. It is the money you actually have to spend and save each month.
Frequently asked questions
Is gross pay before or after tax?
Before. Gross pay is your total earnings before income tax, National Insurance and other deductions.
Which is higher, gross pay or net pay?
Gross pay, because net pay is what is left after deductions.
What is net pay on a payslip?
The amount paid into your bank account after tax, National Insurance, pension and any other deductions. It is usually at the bottom of the payslip.
Is it better to negotiate gross or net salary?
Gross. Employers quote and contract gross pay, and your net depends on your tax code and deductions.
Can my net pay change if my gross pay stays the same?
Yes. A new tax code, a higher pension contribution or a student loan plan change what is deducted.
