What a £5k pay rise is really worth after tax
A £5,000 pay rise sounds like £416 more a month. After PAYE it is often closer to £300 — and it can fall below £160 if the extra pay crosses £100,000.
That is not a trick. A raise is taxed at your marginal rate: the rate on the next pound, not the average rate on your whole salary. This piece uses the same 2026/27 engine as the pay rise calculator. Unless stated, the examples are England, Wales and Northern Ireland, tax code 1257L, no pension or student loan, rounded to the nearest pound.
If you still need the gap between gross and net on today’s salary, start with take-home pay vs gross salary.
Raises are taxed at the marginal rate
Your average tax rate is total tax and NI divided by gross. Your marginal rate is what payroll takes from the increment.
For 2026/27 in rUK, the headline combinations are:
- Below £50,270 — 20% income tax + 8% NI = 28%. You keep 72% of the extra £5,000 (£3,600, about £300 a month).
- Above £50,270 and below £100,000 — 40% income tax + 2% NI = 42%. You keep 58% (£2,900, about £242 a month).
- £100,000–£125,140 — Personal Allowance taper on top of 40% tax, so income tax is 60%, plus 2% NI. You keep 38% of a rise that stays inside the taper (£1,900, about £158 a month).
NI falling from 8% to 2% at £50,270 does not cancel the jump to higher-rate tax. The combined rate goes up, from 28% to 42%.
Open the pay rise calculator with a £5,000 amount rise if you want the monthly change, warnings and a bonus or overtime on the same screen.
What £5,000 extra looks like at common salaries
| Salary after a £5k rise | Extra take-home | Extra per month | You keep | Band |
|---|---|---|---|---|
| £30,000 → £35,000 | £3,600 | £300 | 72.0% | Basic-rate band |
| £40,000 → £45,000 | £3,600 | £300 | 72.0% | Basic-rate band |
| £47,000 → £52,000 | £3,358 | £280 | 67.2% | Crosses £50,270 |
| £60,000 → £65,000 | £2,900 | £242 | 58.0% | Higher-rate band |
| £97,000 → £102,000 | £2,500 | £208 | 50.0% | Crosses £100,000 taper |
| £100,000 → £105,000 | £1,900 | £158 | 38.0% | Inside the taper |
On £40,000 → £45,000 you stay in the basic-rate band. The extra £5,000 costs 20% tax and 8% NI, so take-home rises by £3,600 a year (£300 a month). You keep 72.0%.
On £60,000 → £65,000 the whole rise sits above £50,270. Take-home rises by £2,900 (£242 a month). You keep 58.0%. The same £5,000 of gross is worth £700 less than it was below the higher-rate threshold.
Those two rows are why “I got 5k” is not a complete sentence. The pay rise calculator will show the same split for your tax code.
Crossing £50,270
The painful case is a rise that straddles the higher-rate / NI Upper Earnings Limit.
£47,000 → £52,000 is a £5,000 rise, but only part of it is still in the 28% band. The rest is taxed at 42%. Extra take-home is £3,358 (£280 a month). You keep 67.2% — between the two clean bands.
The calculator flags this with a £50,270 warning when the after package crosses the line. The 2026/27 tax year guide has the rUK and Scottish band tables if you want the statutory numbers behind that warning.
A related trap: people hear “NI drops to 2% above £50,270” and expect the raise to get cheaper. NI does drop. Income tax more than fills the gap.
The £100,000 taper: when £5k is worth much less
Above £100,000 the Personal Allowance tapers away. Combined with 40% tax that is an effective 60% income-tax rate until £125,140, plus 2% NI.
- £97,000 → £102,000 crosses the line. Part of the rise is still at 42%; the rest is in the taper. Extra take-home is £2,500 (£208 a month). You keep 50.0%.
- £100,000 → £105,000 sits inside the taper. Extra take-home is £1,900 (£158 a month). You keep 38.0%.
So the same headline “£5k rise” is worth £3,600 on a £40,000 salary and £1,900 on a £100,000 salary. That is the cliff the pay-rise tool is built to show.
Pension salary sacrifice can pull adjusted income back under £100,000 — the calculator and the pension guide both mention it. Whether that is worth doing depends on the scheme and on what you need the cash for this year.
Student loans, pensions and Scotland
A Plan 2 loan adds 9% on income above £29,385. On a £40,000 → £45,000 rise that is another £450 off the increment, so extra take-home falls from £3,600 to £3,150 (you keep 63.0%). Student loan thresholds for Plans 1, 4 and 5 differ; tick the plan on the calculator rather than subtracting 9% from every rise.
A pension contribution (especially salary sacrifice) reduces the pay that PAYE sees, so the rise and the deduction interact. Model both on the same screen; do not add them up from two different blog tables.
Scotland starts 42% income tax at £43,663, so a £5k rise can hit the higher combined rate earlier than in rUK. NI thresholds stay UK-wide.
A £5k bonus is taxed like a rise. The cashflow is not
The pay rise calculator treats an annual bonus as additional taxable pay on the same PAYE engine. A £5,000 bonus on a £40,000 salary has the same annual tax and NI as a £5,000 salary rise: you keep about £3,600 of it on the headline assumptions.
The difference is timing. A salary rise is spread across the remaining pay packets. A bonus usually hits one month, so that month’s PAYE can look brutal even when the full-year keep rate is still 72% (or 58%, or 38%). Tick “already in current pay” when the bonus is already in the baseline; leave it off to model a new bonus on top.
Overtime is the same idea: weekly hours × hourly rate × 52, then taxed as extra pay. Do not convert a £5k overtime pot into a monthly number until you have seen the marginal rate.
Model the raise, bonus or overtime
Use the pay rise calculator when the question is the increment: a percent or cash raise, an annual bonus, or overtime (weekly hours × rate × 52). It shows the monthly take-home change, the keep/marginal rate, and warnings at £50,270 and £100,000.
Use the UK salary calculator when you want the full 2026/27 payslip on one salary. Use take-home vs gross if you are still translating an offer into monthly cash.
Figures are illustrative estimates from published 2026/27 PAYE bands — not tax, financial or legal advice. Actual pay depends on your tax code, payroll and HMRC.