Net income

Net income is the income you receive after you’ve paid tax, such as Income Tax and National Insurance (NI), to HMRC. In simpler terms, it’s what you’re left with after you’ve paid your taxes.

It’s important to know the difference between your gross pay and take-home pay. That way you can be sure you haven’t been overcharged on tax or paid incorrectly by your employer.

How can I work out my net income?

Working out your net income doesn’t have to be as complicated as it sounds. You can calculate your it by using one of our TaxScouts calculators below:

• This net salary calculator if you’re full-time employed
• This employed and self-employed tax calculator if you’re both (or even just self-employed)
• Or this rental income tax calculator, if you’re a landlord

How does it work in practice?

Here’s an example of how net income is calculated. Kara works full-time as a journalist and has an annual salary of £25,000. That means her gross pay every month is £2,083. However, she won’t receive this much money in her bank account, as both Income Tax and National Insurance need to be deducted.

HMRC will deduct £207 in Income Tax and £83 for NI (in the 24/25 tax year), leaving Kara with £1,793 take-home pay. This £1,793 is also Kara’s net income.

This example, however, doesn’t account for other payments that could still be deducted from Kara’s payslip – such as pension contributions and student loan repayments.

What to do if you think your net income is wrong

If you think there’s something wrong with the net income you’re paid, start by crosschecking your payslip with the amount actually being paid into your bank account. 

Once you’ve done this, speak to your employer first and raise your concern. Their accounts team or your manager should be able to help you with this or at least point you in the right direction. It’s also worth checking with HMRC that you’re on the correct tax code, as this can affect your net income.