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Summary
The salary comparison calculator runs two independent UK tax calculations side by side and shows the real difference in take-home pay. A £5,000 pay rise does not translate to £5,000 more in your pocket — the actual increase depends on your current and new tax band, NI rates, pension contributions, and student loan repayments.
How it works
The calculator applies the standard UK payroll deductions to each salary independently, then computes the difference. Both calculations use the same deduction rules:
- Income tax using HMRC bands (20% basic, 40% higher, 45% additional rate)
- Employee National Insurance (8% between £12,570 and £50,270, 2% above)
- Pension contributions (if specified)
- Student loan repayments at 9% above the relevant plan threshold
The key insight is that the marginal rate on the pay increase may differ from the average rate on either salary. For example, a rise from £45,000 to £55,000 crosses the higher-rate threshold at £50,270, so part of the increase is taxed at 40% + 2% NI rather than 20% + 8%.
What the comparison reveals
Marginal vs average rate
- Average effective rate: total deductions as a percentage of gross salary
- Marginal rate on the increase: the tax rate applied to the additional income between the two salaries
A £10,000 pay rise from £45,000 to £55,000:
- First £5,270 (up to £50,270) taxed at 20% + 8% = 28%
- Remaining £4,730 taxed at 40% + 2% = 42%
- Blended marginal rate on the increase: approximately 34.6%
- Net gain: approximately £6,536 of the £10,000
The 60% trap zone
If the pay rise moves you into the £100,000-£125,140 range, the personal allowance taper means up to 62% of the marginal increase is lost to tax and NI.
Inputs explained
- Salary A / Salary B — two gross annual salaries to compare
- Tax year — determines which rates and thresholds apply
- Pension contribution — percentage of gross salary (applied to both if specified)
- Student loan plan — applied consistently to both calculations
Outputs explained
- Side-by-side breakdown — income tax, NI, pension, and student loan for each salary
- Net pay difference — the actual increase or decrease in take-home pay
- Marginal rate on the difference — shows what percentage of the raise is kept vs lost to deductions
- Monthly figures — the daily reality of what the difference means in practice
Assumptions & limitations
- Both salaries are assumed to be employment income under the same tax code and year.
- Does not model the interaction between two salaries if you hold two jobs simultaneously (see the two-jobs calculator for that).
- Scottish and Welsh rate variations are not modelled — standard HMRC England/NI rates are used.