Net to Gross Salary Explained
Gross salary is what your employer pays you before deductions. Net salary is what you actually receive. The gap between the two — income tax, National Insurance, pension — is often larger than people expect.
Gross vs Net: Key Definitions
| Term | Definition | Where You See It |
|---|---|---|
| Gross salary | Total pay before any deductions | Job offer, contract, payslip top line, P60 |
| Net salary | What lands in your bank account | Payslip "net pay" line, bank statement |
| Taxable income | Gross minus tax-free allowances (e.g., pension) | Used internally by HMRC and your employer |
What Gets Deducted from Gross Pay?
For a typical UK employee the main deductions are:
- Income tax — based on your tax band and tax code. In 2025/26: 20% on £12,571–£50,270, 40% on £50,271–£125,140.
- Employee National Insurance — 8% on £12,571–£50,270, 2% above.
- Pension contributions — auto-enrolment minimum is 5% employee + 3% employer on qualifying earnings. These may be before or after tax depending on the scheme type.
- Student loan repayments — if applicable, repaid at 9% (Plan 1/2) or 6% (Plan 4/5) above the relevant threshold.
Net-to-Gross Worked Examples
Target: £1,700/month take-home (£20,400/year)
You need approximately £24,500 gross.
Tax: ~£2,386 | NI: ~£951 | Effective deduction: ~17%
Calculate exact gross for £1,700/month net →Target: £2,400/month take-home (£28,800/year)
You need approximately £36,500 gross.
Tax: ~£4,786 | NI: ~£1,914 | Effective deduction: ~21%
Calculate exact gross for £2,400/month net →Target: £3,000/month take-home (£36,000/year)
You need approximately £46,000 gross.
Tax: ~£6,686 | NI: ~£2,754 | Effective deduction: ~22%
Use net-to-gross calculator →How Pension Contributions Affect Net-to-Gross
Salary sacrifice pension contributions reduce your taxable income and your NI-liable earnings. This means for every £100 you contribute via salary sacrifice, you typically save £20–£40 in combined tax and NI — so the actual cost to your net pay is only £60–£80.
This makes salary sacrifice pensions more efficient than standard pension contributions made from net pay. See our Salary Sacrifice guide for a detailed comparison.
Why Employers Quote Gross
Gross salary is the contractual figure that benchmarks pay across the market. It doesn't vary by person — two employees on £40,000 gross have the same contract value even if one has student loans and one doesn't. When comparing job offers or negotiating salary, always compare gross figures.