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You pay no Income Tax on the first £12,570 (the personal allowance). Above that, the rest-of-UK rates are 20% up to £50,270, 40% to £125,140, and 45% above. Earn over £100,000 and the allowance tapers away, £1 lost for every £2, which creates a punishing ~60% effective rate between £100,000 and £125,140. Scotland has its own bands.

Employees pay Class 1 NI of 8% on earnings between £12,570 and £50,270, then 2% above. Unlike Income Tax, NI is generally worked out per pay period, so a one-off bonus can be charged more NI in that month. NI funds the State Pension and certain benefits.

Pension contributions reduce your taxable pay. Under salary sacrifice, you give up salary for an employer pension contribution, cutting both Income Tax and National Insurance, and often the employer adds their NI saving too. It's one of the most tax-efficient things most employees can do, especially for higher earners and those caught in the 60% trap.

Student loan repayments are 9% of income above your plan's threshold (6% for postgraduate loans, payable on top). Thresholds for 2025/26 are roughly: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745 (Scotland), Plan 5 £25,000, Postgraduate £21,000. It's collected through PAYE like tax.

• Checking the wrong tax code. A wrong code over- or under-taxes you. 1257L is the standard; check yours on your payslip.
• Ignoring the 60% band. Earning just over £100k can be barely worth it after the allowance taper, pension can fix it.
• Forgetting salary sacrifice saves NI too. Sacrifice beats relief-at-source for most because it also cuts National Insurance.
• Assuming bonuses are taxed more. They aren't taxed at a higher rate overall, NI timing just makes one payslip look heavier.