Most people have a Personal Allowance of £12,570, which is the amount you can earn tax-free. However, if your income exceeds £100,000, your allowance is reduced by £1 for every £2 of income above that threshold. This means for earners above £125,140, the Personal Allowance is completely removed, resulting in a high effective tax rate in that specific 'taper zone'.

Salary sacrifice is often the most tax-efficient way to contribute to a pension. Your employer reduces your gross salary before tax and National Insurance are calculated, saving you both types of deduction. In contrast, 'Relief at Source' contributions are taken from your net pay, and the government adds basic-rate tax relief back into your pension pot later.

Employee National Insurance rates have seen significant fluctuations recently. For the 2025/26 tax year, our calculator uses the standard primary threshold and upper earnings limit to estimate your Class 1 contributions. This deduction funds state benefits like the NHS and State Pension.