DoubleTaxationTaxes on salary: United Kingdom
How much tax and social security is paid on a salary in United Kingdom, what is left as take-home pay, and which special tax regimes exist.
Calculation for a gross salary of €60,000 per year
| Gross salary | £52,314 ≈ €60,000 |
|---|---|
| Income tax | |
| Income Tax | £8,358 ≈ €9,586 |
| Employee contributions | |
| Primary Class 1 National Insurance contributions | £3,057 ≈ €3,506 |
| Take-home pay | £40,900 ≈ €46,908 |
| Employer contributions and payroll taxes | |
| Secondary Class 1 National Insurance contributions | £7,097 ≈ €8,140 |
| Employer's labour cost | £59,411 ≈ €68,140 |
Only some of the country's direct taxes and levies are counted: income tax on wages and compulsory contributions. Not counted: property and real-estate taxes; taxes on dividends, interest and other investment income; inheritance and gift taxes; indirect taxes such as VAT, excise and customs duties.
Official OECD figures for the average wage (Taxing Wages 2026, 2025 data): tax burden on the employee 23.1 %, including employer contributions 32.4 %. OECD
Special tax regimes
These regimes are not included in the calculation above: each has its own conditions.
4-year foreign income and gains (FIG) regime
Who: UK tax residents in their first 4 tax years of residence after at least 10 consecutive tax years of non-residence (from 6 April 2025).
100% relief on foreign income and gains (dividends, interest, rents, profits of a trade carried on wholly abroad) even if brought to the UK; foreign employment income is not covered (see OWR). Claimed on the Self Assessment return; in claim years the Personal Allowance and the CGT annual exempt amount are lost. Replaces the remittance basis abolished from 6 April 2025.
Legal basis: Finance Act 2025, ss. 37, 39 (FIG relief); s. 40, Sch. 9 (remittance basis not available after 2024-25)
Overseas Workday Relief
Who: Employees who are qualifying new residents (10 years of non-residence before arrival), for duties physically performed outside the UK, for up to 4 tax years.
Employment income attributable to overseas workdays is exempt, capped at the lower of 30% of qualifying employment income for the year or £300,000; funds no longer need to be kept offshore. Elected in the Self Assessment return; the election year loses the Personal Allowance and the CGT annual exempt amount.
Legal basis: ITEPA 2003, Part 2, Chapter 5C (inserted by Finance Act 2025, s. 38, Sch. 8)
Temporary Repatriation Facility
Who: Former remittance basis users with foreign income and gains that arose before 6 April 2025.
Temporary reduced charge on designated pre-6 April 2025 foreign income and gains: 12% in 2025/26 and 2026/27, 15% in 2027/28; once paid, amounts can be remitted to the UK without further tax.
Legal basis: Finance Act 2025, s. 41, Sch. 10
Trading allowance
Who: Individuals with trading income (other than from a company they or a connected person control, a partnership, or their employer).
Trading income up to £1,000 a year is exempt and need not be reported; above that, £1,000 may be deducted instead of actual expenses. Cash-basis accounting is the default from 2024/25 with no turnover limit.
Legal basis: ITTOIA 2005, Part 6A (trading and miscellaneous income allowances)
Seafarers' Earnings Deduction
Who: Seafarers performing duties wholly or partly outside the UK with an eligible period of at least 365 days.
Deduction equal to earnings attributable to the eligible period (effectively a 100% Income Tax exemption); NICs still apply. The period is 365+ consecutive days abroad or a combined period in which at least half the days are abroad.
Legal basis: ITEPA 2003, ss. 378–385
Remittance basis
Who: UK residents domiciled abroad (non-doms) — until 5 April 2025
Foreign income and gains were taxed only when brought to the UK; the cost was losing the Personal Allowance and CGT allowance, plus an annual charge of £30,000 after 7 of 9 years of residence (£60,000 after 12 of 14). Abolished from 6 April 2025 and replaced by the FIG regime.
Legal basis: Finance Act 2025, s. 40, Sch. 9; GOV.UK, Tax on foreign income: non-domiciled residents
Individual Savings Account (ISA)
Who: UK residents aged 18 or over (Lifetime ISA: 18 to under 40)
Interest, dividends and gains inside an ISA are tax-free and not reported. In 2026/27 you can pay in up to £20,000 (up to £4,000 of it into a Lifetime ISA). Budget 2026 kept the £20,000 limit for cash ISAs too.
Legal basis: GOV.UK, Individual Savings Accounts (ISAs); HM Treasury, Budget 2026 (cash ISA limit kept at £20,000)
Tax-free pension lump sum
Who: Members of UK pension schemes taking their pension (usually from age 55 at the earliest, depending on scheme rules)
You can usually take up to 25% of each pension pot tax-free, up to £268,275 in total (more if you hold a protected allowance). The rest is subject to Income Tax.
Legal basis: GOV.UK, Tax on your private pension contributions and payments: what's tax-free
Pension Tax Allowance
Who: People over State Pension age whose total income is at or just above the full new State Pension
Pensioners with income up to the full new State Pension will pay no Income Tax; just above that the allowance tapers away. Announced in Budget 2026: to apply from 6 April 2027 to 5 April 2030, to be legislated in Finance Bill 2026-27.
Legal basis: HM Treasury, Budget 2026 (28.10.2026), Income Tax: Pension Tax Allowance
Tax residence
When United Kingdom treats you as a tax resident
- You spent 183 days or more in the UK in the UK tax year — you are automatically UK resident.
- Your only home is in the UK (no home abroad, including in Pakistan, where you spent 30+ days) — under the home test you are UK resident.
- Full-time work in the UK for a 365-day period — you are UK resident.
- Your UK days combined with your UK ties reach the sufficient ties threshold — you are UK resident even with fewer than 183 days.
Assumptions
- Calculated with the OECD Taxing Wages methodology: income tax including local taxes plus employee social security; single person without children, tax year 2026, ECB rate of 2 January 2026.
- Taxpayer in England (rUK rates, as in OECD Taxing Wages); not a Scottish taxpayer; tax code 1257L, NIC category A.
- Personal Allowance of £12,570 is reduced by £1 for every £2 of income above £100,000; the bands apply to taxable income after the allowance.
- NICs computed on annual thresholds (as OECD does); with equal monthly pay the difference from monthly thresholds is under £1 a year.
- Not included: Employment Allowance and Apprenticeship Levy (employer-specific, excluded by OECD), pension auto-enrolment (private pension), student loan repayments.
- Local taxes — location: England (rest of UK rates: England, Wales, Northern Ireland)
- Tax period: 2026-04-06 – 2027-04-05
- Exchange rate: 1 EUR = 0.8719 GBP (ECB euro foreign exchange reference rate (GBP), 02/01/2026)
Sources
- HMRC, Rates and thresholds for employers 2026 to 2027 (Personal Allowance, PAYE bands, Class 1 NIC thresholds and rates)
- GOV.UK, Income Tax rates and Personal Allowances, 2026 to 2027 (Personal Allowance reduced by £1 for every £2 above £100,000)
- OECD Taxing Wages 2026, United Kingdom country note (PA taper from £100,000; employer NIC 15% above £5,000, no UEL; Apprenticeship Levy excluded)
- ECB euro foreign exchange reference rates, GBP, 2 January 2026: 0.87190
Data checked: 01/11/2026. An indicative calculation for a typical case. Not tax advice.