Your NHS payslip takes four main deductions from gross pay: NHS Pension contributions, income tax (PAYE), National Insurance, and — if applicable — student loan repayments. Understanding the order matters, because pension contributions reduce your taxable pay but not your National Insurance.
Step 1: NHS Pension
Your contribution rate (5.2%–12.5%) is set by your annual pensionable pay and applies to the whole of it. This comes off first, before tax is worked out.
Step 2: Income tax
In 2026/27 the first £12,570 of taxable pay (gross minus pension) is tax-free. The next £37,700 is taxed at 20%, income between £50,270 and £125,140 at 40%, and anything above at 45%. Above £100,000 the personal allowance is withdrawn at £1 for every £2, creating an effective 60% band up to £125,140.
These thresholds are frozen, so each annual pay rise pulls more NHS staff into the 40% band — a Band 7 at the top step is now within a few thousand pounds of it once unsocial hours enhancements are added.
Step 3: National Insurance
Employees pay 8% on earnings between £12,570 and £50,270 a year, and 2% above that. NI is calculated on gross pay — pension contributions do not reduce it.
Step 4: Student loan
If you have a student loan, you repay 9% of gross pay above your plan's threshold (6% for postgraduate loans). In 2026/27 the thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4, £25,000 for Plan 5 and £21,000 for postgraduate loans.
Use the take-home calculator on this site to run your own numbers for any band, step or salary, with pension and student loan options.