Income tax is calculated progressively — each band applies only to the slice of income falling within it. The personal allowance taper between £100,000 and £125,140 (£1 reduction per £2 of income over £100,000) creates an effective 60% marginal rate in this range: 40p income tax plus 40p from accelerated withdrawal of the tax-free allowance, which is itself taxed at 40%.

Scottish income tax rates and bands are set independently by the Scottish Parliament under the Scotland Act 2016. Audit correction 25 May 2026: the previous code contained 2024/25 band thresholds. The confirmed 2026/27 figures — enacted via Scottish Rate Resolution on 19 February 2026 (93 votes to 29) — show the Basic and Intermediate thresholds increased by 7.4%, while Higher, Advanced and Top thresholds are frozen. The previous code also incorrectly used the gross income Advanced threshold (£125,140) as a taxable income figure, understating the Top rate band by £12,570. All three errors are corrected below.

Employee Class 1 NI is calculated on gross earnings (after salary sacrifice) per pay period. Unlike income tax it is not cumulative — each period is calculated independently. The main rate was reduced from 12% to 10% in Autumn Statement 2023, then to 8% in Spring Budget 2024, and remains at 8% for 2026/27. The thresholds are aligned with the personal allowance at £12,570, frozen until April 2028.

Student loan repayments are deducted after tax and NI and have no effect on taxable income. They are calculated as a percentage of income above each plan's annual threshold. Multiple plans can run simultaneously — a Plan 2 undergraduate loan alongside a Postgraduate loan produces deductions of up to 15% of income above the lower threshold. Note: thresholds in this codebase were corrected on 24 May 2026 after an audit identified the previous values as 2024/25 figures.

The three pension contribution methods produce different take-home outcomes due to how and when deductions are applied. Under salary sacrifice, contributions reduce both taxable income and NI-liable earnings before either is calculated. Under relief at source and net pay arrangements, contributions are deducted from post-tax income and relief is recovered differently. For higher-rate taxpayers, SIPP contributions attract relief at the marginal rate under current HMRC rules — the net cost of a contribution depends on your individual tax position and may change if tax rates change. This section documents the calculation logic only. It is not a recommendation to use any particular pension arrangement. Always consult a regulated financial adviser or pension provider to understand which arrangement is appropriate for your individual circumstances.

All salary inputs (annual, monthly, weekly, daily, hourly) are converted to an annual equivalent before the tax engine runs. A bug identified by a user on 24 May 2026 showed the day rate multiplier was hardcoded to 5 days per week — meaning a £500/day contractor working 4 days per week was shown an annual figure of £130,000 instead of £104,000 (a 25% overstatement). A configurable days/week field was added and the fix deployed the same day.

Class 4 NI is calculated on taxable profit at 6% between the Lower Profits Limit (£12,570) and Upper Profits Limit (£50,270), and 2% above — 2 percentage points lower than the employed Class 1 rate of 8%. Mandatory Class 2 NI was abolished from April 2024. Above the Small Profits Threshold (£7,105 for 2026/27), a qualifying State Pension year is credited automatically at no cost. Below this, voluntary Class 2 of £3.65/week (£189.80/year) protects State Pension entitlement.

The NHS Pension Scheme applies each tier rate to the entire pensionable pay — not marginally. This creates cliff edges: at the Tier 2/3 boundary (£28,854/£28,855), pension contributions jump by £519 for £1 of additional income. Thresholds are indexed by 3.8% CPI from 1 April 2026. Employer contribution: 23.7%. GP partners submit estimated pensionable profit to PCSE by 28 February each year.

Section 24 replaced mortgage interest deductibility with a 20% basic-rate tax credit, fully in force since April 2020. Landlords calculate tax on gross rental profit (rent minus other allowable expenses — mortgage interest is not deducted here), then claim 20% of finance costs as a credit off the tax bill. For higher-rate landlords this means 20p relief per £1 of interest instead of 40p: a permanent annual cost of 20% of total mortgage interest. The restriction also inflates declared profit, pushing some basic-rate landlords into the higher-rate band. Does not apply to limited companies.

Payments on account are advance payments toward the following year's tax bill. Required when the Self Assessment liability (Income Tax + Class 4 NI only — not CGT or student loans) exceeds £1,000 and less than 80% was collected via PAYE. Each payment is 50% of the prior year's liability. In year two of self-employment this produces the first-January shock: the full year's bill plus 150% falls due on a single date.

HMRC's approved Mileage Allowance Payment rates allow self-employed individuals to deduct business travel costs. The rates — 45p/mile for the first 10,000 business miles, 25p/mile thereafter for cars — have been unchanged since 2011. For locum clinicians travelling between clinical sites these represent a significant allowable deduction. A locum driving 15,000 business miles deducts £5,250 — worth £2,100 in tax saved at the basic rate.

On 25 May 2026 an audit of the Scottish income tax function identified three errors in the band thresholds. The previous code contained 2024/25 figures and a structural error in the Advanced rate ceiling. All three are corrected below, with the old values preserved as comments so any reviewer can verify what changed and why.

Error 1 — Starter band ceiling: coded as taxable £2,306 (gross £14,876). The confirmed 2026/27 figure following the 7.4% threshold uplift is taxable £3,967 (gross £16,537). Scottish earners between £14,876 and £16,537 gross were being charged 20% (Basic) instead of the correct 19% (Starter).

Error 2 — Basic band ceiling: coded as taxable £13,991 (gross £26,561). Correct figure is taxable £16,956 (gross £29,526). Earners between £26,561 and £29,526 gross were being charged 21% (Intermediate) instead of 20% (Basic).

Error 3 — Advanced band ceiling: coded as £125,140 treated as a taxable income figure. This was the gross income threshold incorrectly applied as a taxable figure, meaning the Advanced rate continued to £137,710 gross instead of the correct £125,140 gross (£112,570 taxable). Scottish higher earners above £125,140 — including many GP partners and hospital consultants — were being shown 45% instead of the correct 48% Top rate.

Income tax is partially devolved in the United Kingdom. The Scottish Parliament has full power to set rates and bands for non-savings, non-dividend income of Scottish taxpayers. The Welsh Parliament (Senedd) has power to vary Welsh rates but has exercised this by matching UK rates exactly for 2026/27. Northern Ireland has no income tax devolution. National Insurance is not devolved and applies at identical UK rates in all four nations.

Audit corrections applied 25 May 2026 — two bugs fixed:

Bug 1 — The personal allowance taper above £100,000 was missing from the production scotTax function. The PA is set by UK Parliament (not devolved) and applies equally to Scottish taxpayers under Scotland Act 1998, s.80B. This meant Scottish earners between £100,000 and £125,140 were having their tax undercalculated.

Bug 2 — The same taper was missing from the production ukTax function, only present in the documented ukTaxWithPA version. This affected English, Welsh and Northern Irish earners in the same band.

The Scottish taper zone is more expensive than England's. In England, the effective marginal rate between £100,000 and £125,140 is 60% (40% Higher rate tax + 40% × 50% PA taper = 20% additional). In Scotland it is 67.5% (45% Advanced rate + 45% × 50% PA taper = 22.5% additional). This is a genuinely important distinction for Scottish high earners and is not widely understood.

The NHS pay structure for non-medical staff in England follows the Agenda for Change (AfC) framework. The 2026/27 pay scales took effect from 1 April 2026 following a 3.3% uplift across every pay point, confirmed by NHS Employers on 12 February 2026. AfC pay runs from Band 2 (£25,272) through Band 9 (top of band £129,783). Bands 2 and 3 have one or two pay points; Bands 4 has entry and top; Bands 5–9 each have three (entry, intermediate, top). Progression is annual against the Pay Progression Standard. High Cost Area Supplements (HCAS) of 20% (Inner London), 15% (Outer London) and 5% (Fringe) apply on top of base pay where the post is in scope.

The Teachers' Pension Scheme (TPS) is a Career Average Revalued Earnings (CARE) scheme with member contribution rates tiered by salary. As with NHS Pension, the tier rate applies to the entire salary — not marginally — producing small cliff edges at each threshold boundary. The 2026/27 thresholds were uplifted by 3.8% CPI from 1 April 2026. Boundaries are set to the penny (£36,198.99 → £36,199.00 crosses from Tier 1 to Tier 2) to allow Teachers' Pensions to set contribution rates from the prior April's actual pensionable earnings. Employer contribution: 28.68% from April 2024.

The School Teachers' Pay and Conditions Document (STPCD) is the statutory framework governing maintained-school teacher pay in England. The 2025/26 scales took effect from 1 September 2025 following a 4% uplift confirmed by the STRB's 35th report and accepted by the Secretary of State. STPCD divides England into four pay areas with separate rates: Rest of England, London Fringe, Outer London, and Inner London. Wales has its own scale set by Welsh Government, broadly similar but typically without M1. Main scale runs M1–M6; Upper scale U1–U3 for post-threshold teachers; Leading Practitioner range; and Leadership L1–L43 for heads, deputies and assistant heads.

From 1 April 2026, the Police Pension Scheme 2015 (PPS 2015) member contribution structure changed under the Home Office's Police Pensions Regulations 2026 (ISBN 978-1-5286-6297-0), laid before Parliament in March 2026. The revised three-tier structure achieves a 13.7% average yield (up from 13.48%) and — significantly — switches from full-time-equivalent (FTE) earnings to actual pensionable earnings for tier allocation. This benefits part-time officers whose previous FTE-based tier did not reflect their real income. New rates: 12.88% up to £37,035, 13.88% £37,036–£79,587, 14.22% £79,588+. Tier 1 contains no members under the legacy thresholds; the new thresholds restore its operation.

Police officer pay in England and Wales is set nationally following Police Remuneration Review Body (PRRB) recommendations to the Home Secretary. The 2025/26 scales took effect from 1 September 2025 following a 4.2% uplift covering all federated ranks from Constable to Chief Superintendent. Constable progression follows two separate scales depending on appointment date relative to 1 April 2013. Sergeant has 3 pay points; Inspector has 4; Chief Inspector has 3; Superintendent has 4; Chief Superintendent has 3. London Weighting (£3,150) and London Allowance (max £6,588) apply to Metropolitan and City of London officers. South East allowances of £2,000 (Beds, Hants, Sussex) and £3,000 (Essex, Herts, Kent, Surrey, Thames Valley) apply by force.

Three pension schemes operate concurrently for current and former Armed Forces personnel, with members allocated based on their service start date. AFPS 15 (joined from 1 April 2015) is a Career Average Revalued Earnings (CARE) scheme that adds 1/47th of annual pensionable earnings to a pension pot each scheme year, revalued by Average Weekly Earnings while serving and CPI when deferred. It is non-contributory — uniquely among major UK public sector schemes — with the MOD funding contributions entirely. Normal Pension Age 60. AFPS 05 (2005–2015) is final-salary: 1/70 × years × final pensionable salary, with automatic tax-free 3× lump sum. AFPS 75 (pre-2005) is also final-salary but with rank-related officer accrual that varies from soldier accrual at roughly 1/48. Many AFPS 05 members transferred to AFPS 15 from 1 April 2022 under the McCloud remedy.

Statutory Maternity Pay (SMP) provides up to 39 weeks of paid maternity leave funded by the employer (who reclaims 92% from HMRC, or 103% under Small Employers' Relief). From 6 April 2026, the structure is: 6 weeks at 90% of Average Weekly Earnings (AWE), followed by 33 weeks at the lower of £194.32/week or 90% of AWE. The earnings threshold to qualify rose from £125 to £129/week in line with the Lower Earnings Limit uprating. SMP is taxable income subject to income tax, National Insurance and student loan deductions in the normal way. Enhanced (contractual) maternity pay above SMP is at employer discretion and is taxable as normal employment income.

The full new State Pension for 2026/27 is £241.30/week (£12,547.60/year), an increase of 4.8% over the 2025/26 rate of £221.20/week. The uplift is the highest of three measures under the Triple Lock: CPI inflation (3.8%), Average Weekly Earnings growth (4.8% for May–July 2025), or 2.5%. For 2026/27, earnings won. Eligibility requires reaching State Pension age (currently 66, rising to 67 by 2028) and having at least 10 qualifying NI years; full rate requires 35 qualifying years. Each NI year is worth 1/35 of the full rate (~£6.89/wk or £358.50/yr). State Pension is taxable but no NI is payable on it (or on earnings) once State Pension age is reached. Basic State Pension (pre-2016): £184.90/week.

Statutory redundancy pay is calculated on three variables: age, length of continuous service, and weekly pay (capped at £751/week from 6 April 2026 per the Employment Rights (Increase of Limits) Order 2026, up from £719 in 2025/26). Three age tiers apply: under 22 = 0.5 weeks pay per year; 22–40 = 1 week per year; 41+ = 1.5 weeks per year. The age multiplier is applied year-by-year to the age the employee was during that year of service, not to current age. Service is capped at the most recent 20 years. Maximum statutory entitlement for 2026/27: 20 years × 1.5 weeks × £751 = £22,530. First £30,000 of any redundancy payment (statutory + enhanced) is tax-free. Notice pay and PILON are always fully taxable as normal earnings.

Bereavement Support Payment (BSP) replaced three older benefits (Bereavement Payment, Bereavement Allowance, Widowed Parent's Allowance) for surviving spouses and civil partners widowed on or after 6 April 2017. BSP is tax-free, doesn't affect Universal Credit, and isn't disqualified by remarriage. Two rates apply: Higher rate for those entitled to Child Benefit (or pregnant at the time of death) — £3,500 lump sum plus 18 monthly payments of £350 (£9,800 total). Standard rate for those without dependent children — £2,500 lump sum plus 18 monthly payments of £100 (£4,300 total). Rates unchanged for 2026/27 and have not been uprated since introduction. Cohabiting parents with dependent children have been eligible since the Bereavement Benefits (Remedial) Order 2023.

The Child Maintenance Service (CMS) calculates maintenance using the paying parent's gross weekly income (not net) under The Child Support Maintenance Calculation Regulations 2012. Five rates apply by income tier. Nil rate (£0–£7/wk): no maintenance. Flat rate (£7–£100/wk): £8.40/wk fixed. Reduced rate (£100–£200/wk): tapered. Basic rate (£200–£800/wk): 12% (1 child) / 16% (2) / 19% (3+) of gross income. Basic Plus rate on the slice between £800–£3,000/wk: 9% / 12% / 15% on the additional income. Above £3,000/wk gross is capped at the Basic Plus amount — applications for more must go to court. Adjustments apply for shared care, other children supported, and pension contributions. CMS amounts are estimates only; the gov.uk calculator and CMS service produce binding figures.

The main Payslp calculator implements a single computation engine that handles both employed (PAYE) and self-employed (Self-Assessment) taxpayers through a top-of-page mode toggle. This chapter documents the architecture decision and the specific calculation branches that activate when a user switches to Self-Employed mode. The toggle was introduced on 27 May 2026 as part of the consolidation that brought the previously-separate Self-Employed calculator into the main page, on the basis that nearly all calculation logic (income tax, student loans, pension relief, regional dispatch) is identical between the two cases — only the National Insurance class and a small number of input fields differ. Implementation uses a global currentMode variable, data-mode attributes on individual input fields for show/hide visibility, and a single conditional branch in the ukNI() function to switch between Class 1 (8% main / 2% upper) and Class 4 (6% main / 2% upper).

IR35 — formally the "off-payroll working rules" — is UK tax legislation introduced by the Finance Act 2000 (Schedule 12) and substantially reformed by the Finance Act 2017 (public sector) and Finance Act 2021 (private sector). It applies only to individuals who provide their services through an intermediary, typically a personal service company (PSC) — and only when the underlying working relationship looks like employment rather than genuine self-employment. Sole traders and standard PAYE employees are entirely outside IR35's scope. The legislation's purpose is to prevent "disguised employment" — where an individual would otherwise be taxed as an employee but routes income through a Ltd company to access lower combined Corporation Tax and dividend tax rates. For Payslp's Ltd Company Contractor mode (added 28 May 2026), the user toggles between Outside IR35 (genuine self-employment via PSC, full tax efficiency) and Inside IR35 (deemed employment, PAYE deducted at source by the fee-payer). Under the Chapter 10 ITEPA 2003 framework as reformed in 2021, medium and large engagers issue a Status Determination Statement (SDS) which determines tax treatment; small clients (turnover < £10.2m, balance sheet < £5.1m, < 50 employees) leave responsibility with the contractor's PSC. HMRC's Check Employment Status for Tax (CEST) tool is the official self-assessment instrument, though its outputs have been contested in tribunals (most notably Atholl House Productions Ltd v HMRC [2022] EWCA Civ 501). The financial consequences of IR35 status are now material but smaller than pre-2023 — the Corporation Tax rise to 25% (April 2023) and Employer NI changes (April 2025) have narrowed the Outside-vs-Inside differential considerably.

For contractors operating Outside IR35 through a personal service company, the calculator implements the standard tax-efficient extraction model: low director's salary (typically at the Personal Allowance £12,570) plus dividends from post-Corporation Tax distributable profit. This chapter documents the full computation chain — Day Rate × Billable Days produces annual revenue, from which PSC business expenses, director's salary, employer National Insurance (post-April 2025: 15% above £5,000 Secondary Threshold per Autumn Budget 2024), and any employer pension contributions are deducted to derive pre-Corporation Tax profit. Corporation Tax applies at 19% on small profits (≤£50,000), at the main rate of 25% on profits ≥£250,000, with marginal relief applying in between using the 3/200 standard fraction (Corporation Tax Act 2010, s. 18 as amended by Finance Act 2023). The post-tax distributable profit is taken as dividends, taxed personally at 8.75% / 33.75% / 39.35% across the basic/higher/additional rate bands after the £500 dividend allowance. Personal Allowance tapers above £100,000 of total income at £1 per £2 (penny-accurate in our implementation since 28 May 2026). Student loan repayments are calculated on qualifying income (salary + dividends, reported via Self-Assessment) at 9% above the relevant plan threshold or 6% for postgraduate loans. The optimal salary remains £12,570 even after the April 2025 Employer NI changes — the Corporation Tax savings on the salary-plus-employer-NI deduction exceed the higher employer NI cost across all common revenue levels.

When a contractor's engagement is determined to be "inside IR35" — i.e. the underlying working relationship is one of employment despite the Ltd company intermediary — the Finance Act 2021 reform (for medium and large engagers) shifts the responsibility for tax deduction onto the fee-payer (typically the agency or the end client). The contractor's company receives the contract revenue net of full Income Tax and Class 1 employee National Insurance deducted at source through PAYE. The "deemed employment payment" effectively equals the contract revenue, with no Corporation Tax efficiency, no salary/dividend split optimisation, and no Personal Allowance preservation strategy. The 5% deduction historically permitted to PSCs for notional business expenses (Schedule 12 paragraph 7 of FA 2000) was removed by the 2017 public-sector reform and is not available under the 2021 private-sector framework either. Personal Allowance still applies at £12,570 with the standard taper above £100,000. Student loan repayments are deducted by the fee-payer through PAYE on the full contract revenue as qualifying income — meaning Inside IR35 contractors with student loans pay materially more in repayments than their Outside IR35 equivalents (whose qualifying income is the smaller sum of director's salary plus post-CT dividends). Our calculator implements this as a pure PAYE pass-through on full revenue with no PSC deductions, accurately reflecting the post-2021 statutory framework.