How much of a £5,000 pay rise do I actually keep?

It depends on your current salary. At basic rate (£12,579–£50,270), you keep about £3,600 (72%). At higher rate (above £50,270), you keep about £2,900 (58%). Between £100,000–£125,140, you keep only about £1,900 (38%) due to the Personal Allowance taper.

Is salary sacrifice better than a pay rise?

For long-term savings, usually yes. Salary sacrifice into a pension avoids both income tax and National Insurance, meaning every £1,000 sacrificed costs your take-home only about £580 (at higher rate) while your pension receives the full £1,000. It also costs your employer less than a pay rise because they save employer NI (13.8%).

What is the 60% tax trap?

Between £100,000 and £125,140, your Personal Allowance is withdrawn at £1 for every £2 earned. This creates an effective marginal tax rate of 62% (40% income tax + 2% NI + 20% effective rate from PA loss). Earning above £100,000 means you keep just 38p of each additional pound.

How to Negotiate a Pay Rise Using Your Net Pay Figure (2026/27)

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Current salary: £45,000

£20K

£50K

£100K

£150K

£200K

Raise amount: £5,000

£1K

£5K

£10K

£20K

Current take-home

£2,993.45/mo

New take-home

£3,293.45/mo

Monthly gain

+£300.00/mo

Lost to tax

28%

Your £5,000 raise translates to £300.00 extra per month. That's because the raise is taxed at your marginal rate of 28%. See full breakdown →

How net gain tapers as salary rises

The benefit of a £5,000 raise isn't constant — it depends on where your salary sits relative to tax thresholds. Below the Personal Allowance (£12,579), a raise is barely taxed at all. Above £50,270, the higher rate (40%) kicks in. And in the taper zone (£100,000–£125,140), you effectively lose around 62p per pound.

The chart below shows how much extra you'd take home each month from a £5,000 raise at every salary level. Your current salary from the widget above is highlighted in blue.

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Tax paid on each £1,000 slice of earnings

Taller bars mean more of that £1,000 goes to tax. The ⚠️ marks the £100K–£125K “trap zone” where you lose your Personal Allowance.

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Current salary: £50,000

£20K

£50K

£100K

£150K

£200K

Raise amount (taken as salary): £5,000

£1K

£5K

£10K

£20K

Salary sacrifice into pension: £5,000

£1K

£5K

£10K

£20K

Option A: Take £5,000 as a raise

Extra take-home

+£245.00/mo

See full breakdown →

Option B: £5,000 into pension via salary sacrifice

Take-home drops by

−£300.00/mo

Pension gains

£5,000/yr

Tax + NI saved

£1,400/yr

See salary sacrifice breakdown →

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