How £40,000 is taxed
The first £12,570 is tax-free. The remaining £27,430 all falls in the 20.0% basic rate band, so Income Tax is £5,486. National Insurance is 8% of your earnings above £12,570: £2,194.40.
Altogether, Income Tax and National Insurance take 19.2% of your salary. Of your next £1,000 pay rise, you'd keep £720.00.
£40,000 as an hourly wage
£40,000 a year works out at £20.51 an hour on a 37.5-hour week, or £19.23 on a 40-hour week, before tax. See £20 an hour and £21 an hour for take-home pay at an hourly rate.
What changes your take-home
The same £40,000 salary in some common situations, compared with the figures above.
| Situation | Per month | Per year | Difference |
|---|---|---|---|
| Standard (as above) | £2,693.30 | £32,319.60 | - |
| With a 5% salary sacrifice pension | £2,573.30 | £30,879.60 | −£1,440.00 |
| With a Plan 2 student loan | £2,613.69 | £31,364.25 | −£955.35 |
| With a Plan 5 student loan | £2,580.80 | £30,969.60 | −£1,350.00 |
| Paying Scottish Income Tax | £2,687.88 | £32,254.53 | −£65.07 |
In Scotland, take-home on £40,000 is £32,254.53 a year: £65.07 less than in the rest of the UK, because Scotland sets its own Income Tax bands. A salary sacrifice pension costs you less than it puts in your pot because it comes off before tax and National Insurance.
Nearby salaries
| Salary | Take-home per month | Take-home per year |
|---|---|---|
| £37,000 after tax | £2,513.30 | £30,159.60 |
| £38,000 after tax | £2,573.30 | £30,879.60 |
| £39,000 after tax | £2,633.30 | £31,599.60 |
| £41,000 after tax | £2,753.30 | £33,039.60 |
| £42,000 after tax | £2,813.30 | £33,759.60 |
| £43,000 after tax | £2,873.30 | £34,479.60 |
See take-home pay for every salary from £15,000 to £200,000.