Whether you get paid by the hour, the week, or the month, you can sometimes receive a payslip and be surprised by the deductions that have been made to your earnings.

But when you have to pay tax on your income, put into a pension, pay national insurance contributions, and repay your student loan all at the same time, it is hardly surprising that your monthly take-home pay can seem like less than it should be.

Your payslip should enumerate exactly how much of your earnings were spent on what.

However, if your payslip doesn't tell you this information or if you want to figure out how much your take-home pay would be for a job you don't yet have, then read on as we explore how to calculate your monthly take-home pay.

The simplest way to calculate your monthly take-home pay is to use a tax and salary calculator that takes other payments such as pension and student loan contributions into account. Otherwise, you can work out your take-home pay manually by subtracting all of your other taxes and payments from your monthly wage.

We are going to take you through a step-by-step process of how to work out your monthly take-home pay. For each process, we will use the example of someone earning £60,000 per year (£5,000 per month) pre-tax. This figure is far higher than the average UK salary and many of the contributions you make each month are progressive, meaning your relative contribution will be less if you earn less.

So let's first jump in and find out how to work out your monthly wage.

If you are unsure what your monthly wage is but know your hourly wage, weekly wage, or your annual salary, there are simple steps you can take to work out how much you will earn before tax each month.

If you know your annual salary, to work out your monthly wage you simply take your annual salary figure and divide it by 12 to arrive at your monthly wage.

If you get paid weekly and want to work out your monthly wage, you need to first multiply your weekly earnings by 52 (the number of weeks in the year) and divide the answer by 12 (the number of months in the year).

If you are paid by the hour and want to work out your monthly wage, you need to first multiply your hourly wage by the number of hours you work in a day, for example, 8. Then you multiply your answer by the number of days you work in a week, for example, 5. Now you have your weekly wage you follow the same steps as above by multiplying your weekly wage by 52 and then dividing the answer by 12.

The best way to calculate your Income Tax contributions is to use an Income Tax calculator. However, it is perfectly possible to calculate your contributions yourself.

Your Income Tax contributions are determined by which Income Tax band you are in.

In the UK, everyone has a tax-free allowance of £12,570. However, if you earn over £100,000 per year, your tax-free allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

In 2022, the UK Income Tax rates are currently the following:

Income Tax is paid on earnings within the different thresholds. For example, if you earn £60,000 per year (£5,000 per month):

• You pay no tax on the first £12,570
• You pay 20% on earnings between £12,571 and £50,270 (£37,700)
• 20% of £37,700 is £7,540
• You pay 40% on earnings between £50,271 and £60,000 (£9,729)
• 40% of £9,729 is £3,891.60
• So, if you earn £60,000 per year, you pay a total of £11,431.60 in Income Tax.

If you then want to work out what that is a month, simply divide the number 12.

• £11,431 / 12 = £952.63
• So your monthly Income Tax contribution is £952.63 if you earn £60,000 per year.

National Insurance (NI) is a tax on earnings that is paid into a fund. This fund then contributes to state benefits such as the state pension, sick pay, maternity leave, or unemployment benefits. To be eligible for a full state pension, you need to have made NI contributions for at least 30 years.

You are eligible to pay NI contributions if you are aged 16 or older and either:

• An employee earning over £190 per week
• Self-employed and making £6,725 or above in profit annually

The amount of NI you contribute is determined by which NI class you are in.

### National Insurance classes

Once you have determined the class you are in, you can then find out how much you contribute.

#### Class 1

• So if you earn £5,000 per month (£60,000 per year) you pay 13.25% on £4,189, which is £555.04
• And you pay 3.25% on the final £811, which is £26.35.
• So in total, your monthly NI contributions are £581.39.

#### Class 3

Class 3 is for self-employed people who do not pass the threshold for paying NI contributions but want to make contributions anyway so there isn't a gap in their payments, which means they would still be eligible for the state pension.

For these Class 3 voluntary NI contributions, the current tax rate is £15.85 a week.

#### Class 4

Once you have calculated your NI contributions, you should also subtract that figure from your monthly pre-tax earnings.

Pension contributions can vary depending on your employer, your pension provider, and whether you are self-employed, work in the private sector, or work in the public sector.

If you have been automatically enrolled in a workplace pension scheme, the minimum contributions are:

• So if you earn £60,000 per year (£5,000 a month), then you pay 5% of your earnings towards a pension, which is £250 per month.
• Your employer pays an additional 3%, which is £150 per month.
• In total, you contribute £400 per month towards your pension, but only £250 of this is your money.

This is the standard pension scheme. However, there are many other schemes that you or your employer may have signed you up for, so check to see which one you are a part of.

If you went to university and took out a student loan, then you may also make monthly contributions to your student loan repayment.

The amount you repay each month depends on when you took out the loan and how much you earn.

There are currently four student loan repayment plans:

• Plan 1
• Plan 2
• Plan4

First, you need to figure out which student loan repayment plan you are on and find out whether you are eligible to start paying it.

### What student loan repayment plan am I on?

#### Plan 1

You are on the student loan repayment Plan 1 if you are:

• an English or Welsh student who started an undergraduate course anywhere in the UK before 1 September 2012
• a Northern Irish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
• an EU student who started an undergraduate course in England or Wales on or after 1 September 1998, but before 1 September 2012
• an EU student who started an undergraduate or postgraduate course in Northern Ireland on or after 1 September 1998

For graduates on the Plan 1 loan repayment, you will only start repaying when your pre-tax income is over £388 a week, £1,682 a month, or £20,195 a year.

#### Plan 2

You are on the student loan repayment Plan 2 if you are:

• an English or Welsh student who started an undergraduate course anywhere in the UK on or after 1 September 2012
• an EU student who started an undergraduate course in England or Wales on or after 1 September 2012
• someone who took out an Advanced Learner Loan on or after 1 August 2013
• someone who took out a Higher Education Short Course Loan on or after 1 September 2022

For graduates on the Plan 2 student loan repayments, you will only start repayments when your pre-tax income is over £524 a week, £2,274 a month, or £27,295 a year.

#### Plan 4

You are on the student loan repayment Plan 4 if you are:

• a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
• an EU student who started an undergraduate or postgraduate course in Scotland on or after 1 September 1998

For graduates on the student loan repayments Plan 4, you will only start your repayments when your pre-tax income is over £487 a week, £2,114 a month, or £25,375 a year.

You are on a Postgraduate Loan repayment plan if you are:

• an English or Welsh student who took out a Postgraduate Master’s Loan on or after 1 August 2016
• an English or Welsh student who took out a Postgraduate Doctoral Loan on or after 1 August 2018
• an EU student who started a postgraduate course on or after 1 August 2016

If you took out a Master’s Loan or a Doctoral Loan, you will only start your repayments when your pre-tax income is over £403 a week, £1,750 a month, or £21,000 a year.

### How much are the student loan repayments?

Each plan has a threshold for your weekly or monthly income. You repay:

• 9% of the amount you earn over the threshold for plans 1, 2 and 4
• 6% of the amount you earn over the threshold for the Postgraduate Loan.

So, a Plan 1 graduate earning £60,000 per year (£5,000 per month), will pay 9% student loan repayments on everything they earn over £20,195 per year, which is £39,805.

9% of £39,805 is £3,582.45.

This means that monthly they will pay back £298.53

Once you have calculated all of your monthly contributions to Income Tax, National Insurance, pension schemes, and student loan payments, you can then subtract this figure from your monthly wage.

So if you have a gross salary of £60,000 per year (£5,000 per month) pre-tax and pay the minimum pension contribution and are part of the Plan 1 student loan repayment scheme, each month you will take home: £2,917.45.