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Summary
Total compensation (TC) is the full value of your employment package beyond just base salary. It includes bonuses, employer pension contributions, equity or stock awards, and other quantifiable benefits. Comparing TC rather than base salary alone gives a more accurate picture when evaluating job offers, especially in tech and finance where non-salary components can represent 30-50% of total value.
How it works
Components
The calculator sums all compensation elements into an annual total:
TC = Base salary + Annual bonus + Employer pension + Equity/RSU value + Other benefits
Each component has different characteristics:
| Component | Certainty | Tax treatment | Liquidity |
|---|---|---|---|
| Base salary | Guaranteed | Income tax + NI | Monthly cash |
| Bonus | Variable | Income tax + NI (marginal rate) | Annual cash |
| Employer pension | Guaranteed | Tax-deferred (no income tax until drawn) | Locked until age 55/57 |
| RSUs/equity | Variable (stock price) | Income tax + NI on vesting, CGT on gains | After vesting + holding |
| Benefits in kind | Guaranteed | P11D / salary sacrifice varies | Non-cash |
Comparing offers
When comparing two offers, TC is more informative than base salary but still imperfect because:
- Certainty differs — a guaranteed £80k base is different from £70k base + £10k target bonus
- Time value — pension contributions locked until retirement are less valuable than cash now
- Tax efficiency — employer pension contributions are more tax-efficient than equivalent salary
- Equity risk — RSU value depends on future stock price
Net total compensation
The calculator can also compute the net TC — what you actually receive after tax across all components. This requires applying different tax treatments to each element.
Worked example
Job offer: £75,000 base, 15% bonus target, 8% employer pension, £20,000 RSUs/year
- Base salary: £75,000
- Target bonus: £75,000 x 15% = £11,250
- Employer pension: £75,000 x 8% = £6,000
- Annual RSU value: £20,000
- Total compensation: £112,250
Net TC (approximate):
- Base net: ~£52,000
- Bonus net (at 42% marginal): ~£6,525
- Pension: £6,000 (deferred, no immediate tax)
- RSU net (at 42% marginal): ~£11,600
- Net TC: ~£76,125
Inputs explained
- Base salary — annual gross salary
- Bonus — target or expected annual bonus (percentage or fixed amount)
- Employer pension — the percentage or amount your employer contributes
- Equity/RSUs — annual value of equity awards at current share price
- Other benefits — car allowance, health insurance, gym membership, etc.
Outputs explained
- Total compensation — the combined annual value of all components
- Component breakdown — pie chart showing the proportion of each element
- Net total compensation — after-tax value across all components
- Comparison mode — side-by-side comparison of two offers
Assumptions & limitations
- Bonus is assumed at target. Actual bonuses may be 0-200% of target depending on performance. Consider probability-weighting the expected value.
- Equity is valued at current price. Stock-based compensation can vary significantly. Using a discount (e.g., 75% of current value) may be more realistic.
- Pension value is nominal. The real value of pension contributions depends on investment growth and your tax rate at retirement.
- Does not include non-quantifiable benefits like flexible working, career development, or work-life balance.