Gross vs net pay: the difference, and how to work out one from the other
The short answer: gross pay is what you earn before anything comes off. Net pay is what actually reaches your bank. On a £35,000 salary with a 5% pension and a Plan 2 student loan, gross pay is £2,917 a month and net pay is about £2,235.
Gross to net in one example
Here is how £35,000 a year turns into take-home pay, with a 5% pension and a Plan 2 student loan.
| Line | Year | Month |
|---|---|---|
| Gross pay | £35,000 | £2,917 |
| Pension (5%) | −£1,750 | −£146 |
| Income Tax | −£4,136 | −£345 |
| National Insurance | −£1,794 | −£150 |
| Student loan (Plan 2) | −£505 | −£42 |
| Net pay | £26,815 | £2,235 |
The formula is simple: net pay = gross pay − all deductions. The hard part is working out each deduction, because they use different thresholds.
What counts as gross pay
- Basic salary or hourly pay
- Overtime, shift allowances and unsocial hours pay
- Bonuses and commission
- Holiday pay and sick pay
- Some allowances, such as London weighting or a car allowance
Benefits like a company car or health insurance are not paid to you, but they are taxed. They usually reduce your tax code, so you take home less.
What comes off between gross and net
For most employees it is Income Tax, National Insurance and a workplace pension, plus a student loan if you have one. Each uses its own threshold, which is why the share you keep changes with your salary. For what each line on your payslip means and what to check every month, see how to read your payslip.
How much of your gross pay you keep
| Gross salary | Net pay a year | Net a month | Share kept |
|---|---|---|---|
| £20,000 | £17,920 | £1,493 | 90% |
| £30,000 | £25,120 | £2,093 | 84% |
| £40,000 | £32,320 | £2,693 | 81% |
| £55,000 | £42,457 | £3,538 | 77% |
| £80,000 | £56,957 | £4,746 | 71% |
The share you keep falls as pay rises, because more of your income is taxed at higher rates. That is why a pay rise is always worth less than it looks. See how income tax bands work.
Salary sacrifice changes your gross pay
With a normal pension, the contribution comes off after NI is worked out. With salary sacrifice, you agree to a lower gross salary and your employer pays the difference into your pension. Your gross pay is lower, but you pay less NI. On £35,000 with 5% going into the pension, salary sacrifice leaves you about £140 a year better off. See how salary sacrifice works.
What you cost your employer
Your gross pay is not the full cost of employing you. On £35,000, your employer also pays about £4,500 in employer NI and at least 3% of qualifying earnings into your pension. That is worth knowing when you ask for a rise or swap pay for pension.
Where to find gross and net pay
- Payslip: gross pay at the top of the payments section, net pay at the bottom. See how to read your payslip.
- P60: your total pay and tax for the tax year, given to you each May or June.
- P45: your pay and tax so far in the year, when you leave a job.
Gross and net for the self-employed
If you work for yourself, gross usually means your turnover, and profit is what is left after business costs. Tax and NI are worked out on profit and paid through Self Assessment, not taken from each payment. Set money aside as you go.
Working backwards: from net to gross
If you know the take-home you need, this is the salary you need to ask for, with no pension or student loan:
| Net pay a month | Gross salary needed | Gross a month |
|---|---|---|
| £1,500 | £20,120 | £1,677 |
| £2,000 | £28,450 | £2,371 |
| £2,500 | £36,780 | £3,065 |
| £3,000 | £45,120 | £3,760 |
The take-home pay calculator has a target mode that does this for you, including pension and student loan.
Gross and net hourly pay
| Gross an hour | Net an hour (full-time) |
|---|---|
| £12.71 | £10.96 |
| £15.00 | £12.60 |
| £20.00 | £16.20 |
| £25.00 | £19.80 |
These assume a 37.5-hour week all year. Part-time workers keep a bigger share of each hour, because more of their pay falls in the tax-free allowance.
Common gross and net mistakes
- Comparing a gross offer with your net pay: always compare gross with gross, or net with net.
- Forgetting the student loan: it is easy to miss when comparing jobs, but can take hundreds a month.
- Mixing up monthly and yearly: a £3,000 a month offer is £36,000 a year, not £3,000 more.
- Ignoring the pension: a job with a 10% employer pension can be worth more than one paying £2,000 more with the 3% minimum.
Related reading: the salary to take home £2,000 a month.
This is general information, not financial advice. Figures use 2026/27 rates and the standard 1257L tax code.
Sources
Common questions
What is the difference between gross and net pay?
Gross pay is what you earn before anything is taken off. Net pay, or take-home pay, is what lands in your bank after income tax, National Insurance, pension, student loan and any other deductions.
Is salary quoted gross or net in the UK?
Gross. Job adverts, contracts and pay rises are almost always quoted before tax, so you need to work out the net figure yourself.
Does gross pay include pension?
Usually yes: your pension contribution is taken from your gross pay. With salary sacrifice, your gross pay is reduced by the sacrifice before tax and NI are worked out.
Is net pay the same as take-home pay?
Yes. Net pay, take-home pay and net income all mean what you actually receive after deductions.
What percentage of gross pay do you take home?
It depends on your salary. On £30,000 with no pension or loan you keep about 84%. On £80,000 it is about 71%.
How do I work out gross pay from net pay?
Work backwards: add the deductions back on. Because tax and NI change at thresholds, a calculator with a target take-home option is the easiest way.