How we calculate

Last updated: June 2026

Accuracy is the whole point of a calculator, so this page sets out exactly how PayCalc UK works out its figures: where the numbers come from, the tax year we use, the formulas behind each tool, the assumptions we make, and how to tell us if something looks wrong.

Where our figures come from

Every rate, threshold and allowance is taken from official UK government sources — we don't invent or estimate them. Our primary references are:

Each calculator also lists its specific sources in a “Sources” box beneath the results, so you can check the official figures yourself.

The tax year we use

Unless a tool lets you pick a year, calculations use the 2026/27 UK tax year (6 April 2026 to 5 April 2027). We review the figures when HMRC and DWP confirm new rates — typically after the Autumn Budget and again before the new tax year in April — and update the “last updated” date on each page when we do.

How each calculator works

Income tax & take-home pay

We apply your personal allowance (tapered away by £1 for every £2 of income over £100,000), then the basic, higher and additional rate bands — or the Scottish bands if you select Scotland. National Insurance is calculated separately on earnings above the primary threshold. Pension contributions, salary sacrifice and student loan repayments are applied in the correct order before arriving at net pay.

Self-employment & dividends

Sole-trader profit is taxed using the income tax bands plus Class 4 National Insurance, with an estimate for payments on account. Dividends use the £500 dividend allowance and the dividend rates, stacked on top of your other income.

Capital Gains, crypto & VAT

Capital Gains Tax applies the £3,000 annual exempt amount and the 18%/24% rates, with crypto treated as a chargeable asset (each disposal pooled per HMRC rules). VAT is a straightforward add/remove at the rate you choose.

Mortgages, loans & borrowing

Mortgages and personal loans use the standard amortisation formula — a fixed monthly payment that clears the balance over the term, with interest charged on the reducing balance. The credit card tool simulates the balance month by month (including the shrinking minimum payment); car finance models PCP and HP including the balloon/GMFV; and the balance transfer tool compares paying off a 0% card, net of its fee, against staying put.

Savings, pensions & Universal Credit

Savings use compound interest on your starting balance and regular deposits. The pension tool projects a pot from contributions, employer top-ups and assumed growth. Universal Credit applies the standard allowance, work allowance and the 55% taper, plus the Minimum Income Floor for the self-employed where relevant.

Our assumptions & limits

Calculators are illustrations, not personal forecasts. Unless you tell them otherwise they assume a single employment, a constant interest or growth rate over the period, and standard circumstances. Real life varies — rates change, deals have fees, and your own tax code or benefit situation may differ. Where a figure is an estimate or simplification, we say so on the page.

How we check the numbers

Our formulas are unit-tested against worked examples, and we cross-check results against official government calculators where one exists (for example HMRC's tax and stamp duty tools). When the rules change, we update the figures and re-run those checks.

Found an error? Tell us

We'd genuinely rather hear about a mistake than not — accuracy is what makes a calculator worth using. If a figure looks off, please contact us with the inputs you used and we'll investigate and correct it.

Not financial advice

PayCalc UK provides information and illustrative calculations only. We are not financial advisers, accountants or brokers, and nothing here is personal advice. For decisions about your money, speak to an appropriately qualified professional. See our disclaimer for full details.

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