Gross vs net salary

Gross salary is your pay before anything is taken off. Net salary is what is left after deductions: Income Tax, National Insurance, your pension contribution and, if you have one, a student loan repayment. On a £33,673 council salary in England in 2026/27, someone in the Local Government Pension Scheme with no student loan ends up with about £26,013 a year net, or roughly £2,168 a month.

What counts as gross pay

Gross pay is everything your employer pays you for the period before deductions. For most public sector staff that is basic salary, but it also includes anything else that goes through payroll: overtime, unsocial hours enhancements, on-call payments, London weighting or a high cost area supplement, TLR payments for teachers, and acting-up allowances.

The figure on a job advert is almost always the full-time annual salary. If you work fewer hours, your real gross is that figure pro rata. A post advertised at £30,000 for 37 hours pays £15,000 gross for 18.5 hours. FTE salary vs actual salary and how to read the salary on a public sector job advert go through this in more detail.

Gross pay does not include anything your employer pays on top of your salary, such as employer National Insurance or the employer’s pension contribution. Those are real costs to the employer, but you never see them on your payslip as income.

What comes off between gross and net

Four deductions do most of the work.

Income Tax is charged on income above your personal allowance, which is £12,570 in 2026/27. In England, Wales and Northern Ireland the next £37,700 is taxed at 20 per cent, and income from £50,271 to £125,140 at 40 per cent. Scotland has six bands of its own.

National Insurance for employees is 8 per cent on earnings between £12,570 and £50,270 a year, and 2 per cent above that. It is worked out on each pay period separately: £1,048 a month is the starting point.

Your pension contribution depends on the scheme and your pay. Public sector schemes take it before Income Tax is calculated, so it reduces your tax bill but not your National Insurance.

Student loan repayments are 9 per cent of earnings above your plan’s threshold, plus 6 per cent above £21,000 if you also have a postgraduate loan.

After those, there may be voluntary or contractual deductions: union subscriptions, salary sacrifice schemes, payroll giving, car parking, or repayment of an overpayment. Employers can only make deductions that are required by law, written into your contract or agreed by you in writing beforehand.

A worked example: council officer on SCP 20

Say you work full time for a council in England on spinal column point 20 of the NJC pay spine, which is £33,673 a year from 1 April 2026. You are in the main section of the LGPS, you have no student loan and your tax code is 1257L.

Item	Annual	Monthly
Gross salary	£33,673.00	£2,806.08
LGPS contribution (6.5%)	£2,188.74	£182.40
Income Tax	£3,782.85	£315.24
National Insurance	£1,688.24	£140.69
Net pay	£26,013.17	£2,167.76

The LGPS rate is 6.5 per cent because the salary sits in the £29,001 to £47,300 band. Income Tax is 20 per cent of £33,673 minus the pension contribution minus the £12,570 allowance. National Insurance is 8 per cent of £33,673 minus £12,570, with no reduction for the pension.

So about 77 per cent of gross reaches your bank account. That proportion falls as pay rises, because more of each pound is taxed and pension rates step up with pay. For your own figures, the take-home pay calculator does the same sums.

Why net pay can change when gross does not

Your gross salary can stay the same for a year while your net pay moves. The usual causes:

• a new tax code, for example when HMRC collects underpaid tax or adds a taxable benefit
• moving into a different pension contribution band, which most schemes reassess each April
• a student loan starting to be collected, or finishing
• an emergency tax code after a job change
• a month with five Fridays for weekly paid staff, or two pay dates in one period

If a payslip looks wrong, compare it line by line with the previous one. How to read your payslip shows where each figure sits.

Gross, net and what lenders or benefits look at

Different organisations use different figures. Mortgage lenders and letting agents usually ask for gross salary and check it against payslips. Universal Credit looks at your earnings after tax, National Insurance and pension contributions in each monthly assessment period. Child Benefit and Tax-Free Childcare use adjusted net income, which is a tax term: roughly your taxable income minus certain pension contributions and Gift Aid. It is not the same as the net pay on your payslip.

When a form asks for “income”, check which one it means before filling it in.

Gross vs net when comparing job offers

Two jobs with the same gross salary can leave you with different net pay. The pension scheme is the biggest variable in the public sector. On £33,673, the NHS Pension Scheme would take 8.3 per cent and the Civil Service alpha scheme 4.6 per cent, against 6.5 per cent in the LGPS. A lower contribution means more cash now, but the schemes also build up pensions at different rates, so the cheaper one is not automatically the better deal.

Location matters too. A Scottish taxpayer on the same gross pays slightly different Income Tax because of Scotland’s starter and intermediate rates. Take-home pay explained covers the order these deductions are applied in and how to check each one.