Salary Comparison Calculator 2025/26
Compare two job offers side by side. Enter the salary, bonus, pension, and benefits for each offer to see the true take home pay difference after income tax, National Insurance, and other deductions for the 2025/26 tax year.
How the Salary Comparison Calculator Works
Choosing between two job offers is one of the most important financial decisions you can make. A higher headline salary does not always mean more money in your pocket. Our salary comparison calculator breaks down every component of each offer so you can make an informed decision based on real take home pay figures rather than gross salary alone.
For each offer, the calculator takes your gross salary and annual bonus to compute total earnings. It then applies the correct 2025/26 income tax bands for your selected region (England and Northern Ireland, Scotland, or Wales), calculates National Insurance contributions, deducts any student loan repayments, and subtracts your employee pension contribution. The result is your annual take home pay, broken down to a monthly figure for easy comparison.
The calculator also computes the total package for each offer, which includes not just your gross earnings but also employer pension contributions and other benefits. This gives you the complete picture of what each employer is offering, helping you weigh short-term cash flow against long-term total compensation.
Understanding Total Compensation Packages
A job offer is more than just a salary figure. Modern compensation packages can include several components, each of which affects the true value of the offer:
- Base salary: The fixed annual amount paid before any deductions. This is the foundation of your compensation and determines your income tax and National Insurance liability.
- Annual bonus: A variable payment, often tied to company or individual performance. Bonuses are taxed as part of your total earnings at the same rates as salary. While not guaranteed, they can significantly increase your total compensation.
- Employer pension contributions: Money your employer pays into your pension pot on your behalf. The legal minimum under auto-enrolment is 3% of qualifying earnings, but many employers offer 5%, 8%, or even higher. This is effectively free money that does not appear in your take home pay but builds your retirement savings.
- Employee pension contributions: The amount you contribute to your pension from your own salary. The auto-enrolment minimum is 5% (including tax relief), but you may choose to contribute more. Higher contributions reduce your take home pay but increase your pension pot.
- Other benefits: These can include private health insurance, dental cover, company car or car allowance, gym membership, cycle-to-work scheme, enhanced parental leave, professional development budgets, and more. While harder to quantify, these benefits have real monetary value.
Income Tax Rates for 2025/26
The income tax you pay on each offer depends on where you live in the UK. England, Wales, and Northern Ireland share the same income tax bands, while Scotland has its own rates set by the Scottish Parliament.
England, Wales, and Northern Ireland
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 20% |
| Higher Rate | £50,271 to £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Scotland
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter Rate | £12,571 to £14,876 | 19% |
| Basic Rate | £14,877 to £26,561 | 20% |
| Intermediate Rate | £26,562 to £43,662 | 21% |
| Higher Rate | £43,663 to £75,000 | 42% |
| Advanced Rate | £75,001 to £125,140 | 45% |
| Top Rate | Over £125,140 | 48% |
When comparing offers in different regions, the tax difference can be significant. For example, a £50,000 salary in Scotland incurs approximately £300 more income tax than the same salary in England, due to the higher intermediate and higher rate bands.
National Insurance Contributions 2025/26
National Insurance is a separate deduction from income tax and applies equally across all UK regions. For employed workers in 2025/26:
| Earnings Band | Employee NI Rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,570 to £50,270 | 8% |
| Above £50,270 (UEL) | 2% |
The NI threshold is aligned with the personal allowance at £12,570, meaning both income tax and NI begin at the same earnings level. The combined marginal rate for basic rate taxpayers is 28% (20% tax + 8% NI), rising to 42% (40% tax + 2% NI) for higher rate taxpayers.
Worked Examples
Example 1: Two Offers at Different Salaries
Offer A pays £40,000 with no bonus and 3% employer pension. Offer B pays £45,000 with no bonus and no pension. Both in England with no student loan.
- Offer A take home: Income of £40,000 minus £5,486 income tax minus £2,194.40 NI = £32,319.60. Total package: £40,000 + £1,200 employer pension = £41,200.
- Offer B take home: Income of £45,000 minus £6,486 income tax minus £2,594.40 NI = £35,919.60. Total package: £45,000 with no pension = £45,000.
- Difference: Offer B gives £3,600 more take home per year (£300 per month), and £3,800 more in total package.
In this case, Offer B wins on both take home pay and total package. But if Offer A had a 10% employer pension (£4,000), the total package would be £44,000, much closer to Offer B.
Example 2: Same Salary, Different Pension and Benefits
Both offers pay £50,000 in England. Offer A has 5% employer pension, 5% employee pension, and £3,000 in benefits. Offer B has 3% employer pension, 3% employee pension, and no benefits.
- Offer A take home: £50,000 minus £7,486 tax minus £2,994.40 NI minus £2,500 employee pension = £37,019.60. Total package: £50,000 + £2,500 + £3,000 = £55,500.
- Offer B take home: £50,000 minus £7,486 tax minus £2,994.40 NI minus £1,500 employee pension = £38,019.60. Total package: £50,000 + £1,500 = £51,500.
- Difference: Offer B gives £1,000 more take home (£83 per month), but Offer A has £4,000 more in total package value.
This is a classic trade-off. Offer A provides more total compensation, but Offer B puts more cash in your pocket each month. The right choice depends on your priorities: monthly cash flow versus long-term savings and benefits.
Example 3: Salary Plus Bonus vs Higher Salary
Offer A pays £35,000 base plus £10,000 annual bonus. Offer B pays £45,000 with no bonus. Both in England with no pension or benefits.
- Offer A total earnings: £45,000. Tax: £6,486. NI: £2,594.40. Take home: £35,919.60.
- Offer B total earnings: £45,000. Tax: £6,486. NI: £2,594.40. Take home: £35,919.60.
The take home pay is identical because bonuses are taxed at the same rates as salary. However, there is an important practical difference: bonuses are often discretionary and may not be paid in full every year. A guaranteed £45,000 salary provides more certainty than a £35,000 salary with a £10,000 target bonus.
What Changed in April 2025
Several changes in the 2025/26 tax year affect salary comparisons:
- Frozen tax thresholds: The personal allowance (£12,570), basic rate band (£37,700), and higher rate threshold (£50,270) all remain frozen. With wages rising due to inflation, more workers are being pushed into higher tax bands through fiscal drag.
- Employer NI increase: From April 2025, employer NI rose from 13.8% to 15% with the threshold dropping from £9,100 to £5,000. While this does not directly affect your take home pay, it increases the cost of employing you and may influence future pay decisions.
- National Living Wage: The NLW increased to £12.21 per hour for workers aged 21 and over, affecting entry-level salary comparisons.
Common Mistakes When Comparing Salaries
1. Ignoring the Pension
A common mistake is focusing solely on gross salary and ignoring pension contributions. An employer contributing 8% to your pension is effectively paying you 8% more than your headline salary, but this value only materialises at retirement. Over a 30-year career, the compounded growth of a higher employer pension contribution can be worth hundreds of thousands of pounds.
2. Treating Bonuses as Guaranteed
When comparing a salary-plus-bonus offer against a higher base salary, many people treat the bonus as guaranteed income. In practice, bonuses are often discretionary, tied to company performance, or capped at a percentage of salary. A £40,000 salary with a “target” £5,000 bonus is not the same as a guaranteed £45,000 salary. Consider the worst case: if the bonus is not paid, which offer still meets your needs?
3. Forgetting the Tax Impact
A £10,000 salary increase does not mean £10,000 more in your pocket. Due to progressive taxation and National Insurance, the actual take home increase depends on which tax band the extra income falls into. An increase from £40,000 to £50,000 yields about £7,200 more take home (72% retained), while an increase from £50,000 to £60,000 yields about £5,800 more take home (58% retained) due to the 40% higher rate tax band.
4. Not Accounting for Benefits Value
Benefits such as private health insurance, dental cover, and company car allowances have real monetary value. Private health insurance for a family can cost £1,500 to £3,000 per year if purchased individually. A company car allowance of £5,000 is taxable but still valuable. When entering the “Other Benefits” field, estimate the annual retail cost of all benefits offered to get a fair comparison.
5. Comparing Across Tax Regions Without Adjusting
If one offer is based in Scotland and the other in England, the income tax calculations will differ. Our calculator handles this automatically when you select the correct tax region, but many people comparing offers manually forget to account for the different Scottish tax bands. At £50,000, a Scottish taxpayer pays approximately £300 more in income tax than an English taxpayer.
How Pension Contributions Affect Your Comparison
Pension contributions have a dual impact on salary comparison. First, employee pension contributions reduce your take home pay because they are deducted from your salary. Second, employer pension contributions increase your total package value without costing you anything.
Consider two jobs both paying £50,000. Job A requires 5% employee contribution and matches with 5% employer contribution. Job B has no pension scheme. Job A gives you £2,500 less take home per year, but you gain £2,500 in employer pension plus your own £2,500 in your pension pot. Over 20 years with 5% annual growth, that employer contribution alone would be worth approximately £82,000 in your pension.
When comparing offers, always calculate both the immediate impact on your monthly budget and the long-term value of pension contributions. If you can afford the lower take home pay, a better pension is almost always worth more in the long run.
Student Loan Repayment Thresholds 2025/26
If you have a student loan, repayments are calculated on your total earnings above the relevant threshold:
| Plan | Threshold | Rate |
|---|---|---|
| Plan 1 | £24,990 | 9% |
| Plan 2 | £27,295 | 9% |
| Plan 4 (Scotland) | £31,395 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Student loan repayments are applied equally to both offers since they are based on your total earnings, not the employer. However, a higher salary means higher repayments, so the take home difference between two offers is slightly smaller when you have a student loan compared to when you do not.