Pay Rise Calculator (Real Terms)

Check if your pay rise beats inflation. Compare nominal and real-terms increases.

Last updated: April 2026 · Source: GOV.UK — Income Tax rates and Personal Allowances

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Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

When you receive a pay rise, not all of the increase reaches your pocket. The marginal rate of tax and NI on the raise determines how much you actually keep. For example, a basic-rate taxpayer loses 20% to income tax and 8% to NI, keeping 72p of each additional pound. A higher-rate taxpayer keeps only 58p.

This calculator takes your current salary and the proposed new salary, then calculates the exact change in take-home pay. It accounts for any threshold crossings — for instance, if the rise pushes you from basic to higher rate, only the portion above £50,270 is taxed at the higher rate.

The results show your old and new annual take-home pay, the gross increase, the net increase (what you actually keep) and the effective rate of deductions on the raise. This helps you negotiate salary increases with a clear understanding of the real-world impact.

Example: £38,000 to £42,000 pay rise

  1. Gross increase: £4,000
  2. Additional income tax (20%): £800
  3. Additional employee NI (8%): £320
  4. Additional pension (5%): £200
  5. Net increase in take-home: £2,680 (67% of the gross rise)

Source: GOV.UK — Income Tax rates and Personal Allowances

Frequently Asked Questions

What does the Pay Rise Calculator (Real Terms) do?
Check if your pay rise beats inflation. Compare nominal and real-terms increases. All calculations are performed in your browser using official UK rates and thresholds.
Is this calculator based on 2025/26 rates?
Yes. This calculator uses the current 2025/26 UK tax year rates for income tax, National Insurance and other deductions, effective from 6 April 2025.
Does this include pension contributions?
This calculator can factor in workplace pension contributions. Under auto-enrolment, the minimum is 8% total (5% employee + 3% employer) of qualifying earnings.