Why is my pay rise taxed so much?

Every pound of a rise sits on top of your existing salary, so it is taxed at your highest marginal rate: income tax plus National Insurance plus any student loan. Between £100,000 and £125,140 the personal allowance taper pushes the effective rate to about 60%.

Do I need to tell HMRC about a new job?

Usually your new employer's payroll does it via your P45. But codes often lag or default to emergency tax, which is why checking your first payslip's tax code is worth it.

Should I put a pay rise into my pension instead?

If the rise pushes you over £50,270, £60,000 (child benefit) or £100,000 (childcare and allowance taper), sacrificing some of it into your pension can keep more total value. Run the numbers both ways before deciding.

Money moment · 6 steps · all free

New job or pay rise

What the new number really pays after tax, the payslip checks that catch HMRC errors early, and how to bank the difference before lifestyle absorbs it.

1
See what it is really worth
A £3,000 rise is not £250 a month in your pocket. See the real monthly gain and the marginal rate you now sit on.
Pay rise calculator →
2
Check the first payslip
Job changes are when tax codes go wrong, and emergency codes overtax you for months. Thirty seconds against your code catches it.
Tax code checker →
3
Know the full picture
Pension, student loan and NI all shift with the new salary. Get the complete monthly take-home so the budget is built on truth.
Take-home pay calculator →
4
Bank the difference first
Lifestyle creep eats rises silently. Set a standing order for half the monthly gain on payday one, before you get used to it.
Savings goal planner →
5
Dodge the thresholds with sacrifice
Near £50,270 or £100,000, salary sacrifice into your pension can beat taking the cash. See what the trade actually costs you.
Salary sacrifice calculator →
6
Understand the bands
Five minutes on how UK salary tax actually works makes every future negotiation sharper.
How is my salary actually taxed in the UK? →

Not sure where you stand overall?

The Money Health Check scores your whole position in three minutes and ranks what to fix first.

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Common questions

Why is my pay rise taxed so much?: Every pound of a rise sits on top of your existing salary, so it is taxed at your highest marginal rate: income tax plus National Insurance plus any student loan. Between £100,000 and £125,140 the personal allowance taper pushes the effective rate to about 60%.
Do I need to tell HMRC about a new job?: Usually your new employer's payroll does it via your P45. But codes often lag or default to emergency tax, which is why checking your first payslip's tax code is worth it.
Should I put a pay rise into my pension instead?: If the rise pushes you over £50,270, £60,000 (child benefit) or £100,000 (childcare and allowance taper), sacrificing some of it into your pension can keep more total value. Run the numbers both ways before deciding.

More moments: Having a baby · Buying your first home · Made redundant · All journeys

New job or pay rise

See what it is really worth

Check the first payslip

Know the full picture

Bank the difference first

Dodge the thresholds with sacrifice

Understand the bands

Common questions