Adjusted Net Income Calculator

Adjusted net income is your total taxable income for the year, before your Personal Allowance is taken off, minus a small, specific set of reliefs: pension contributions, Gift Aid donations, and trading losses. It's not the same thing as your salary, and it's not the same thing as your taxable income after the Personal Allowance has already been deducted.

HMRC uses this one figure to decide two different things, both of which start to matter well before most people expect:

The Personal Allowance taper, above £100,000. Your Personal Allowance, £12,570 for 2026/27, goes down by £1 for every £2 your adjusted net income is above £100,000. By the time adjusted net income reaches £125,140, the Personal Allowance is gone entirely. Because you lose £1 of tax-free Personal Allowance for every £2 you earn above £100,000, and that lost allowance is then taxed at 40%, income between £100,000 and £125,140 is effectively taxed at 60%, a mechanic commonly called the “60% tax trap”. It isn't a literal separate 60% tax band, just the combined effect of Income Tax plus the lost allowance, and it only affects income in this specific band; below £100,000 or above £125,140, the marginal rate drops back to the normal 40% (or 45% once you're into the additional rate band).

The High Income Child Benefit Charge, above £60,000. If you or your partner claims Child Benefit, and either one of you has an adjusted net income over £60,000, some of it is clawed back through a tax charge: 1% of the Child Benefit you received for every £200 your adjusted net income is above £60,000. Once adjusted net income reaches £80,000, the whole amount is clawed back. The charge is based on whichever partner has the higher adjusted net income, not household income, and is paid via that person's Self Assessment return even if the Child Benefit itself is claimed by someone else in the household.

Both thresholds use the same adjusted net income figure, but they're separate tests with separate consequences, and a household can easily be affected by one, both, or neither depending on income and whether Child Benefit is claimed at all.

Priya earns a salary of £115,000 in 2026/27, with no other income. Before any deductions, her adjusted net income is £115,000, which is £15,000 above the £100,000 threshold.

• Personal Allowance reduction: £15,000 ÷ 2 = £7,500
• Personal Allowance remaining: £12,570 − £7,500 = £5,070

Priya's accountant suggests a pension contribution to bring her back under £100,000. She pays £12,000 net into a relief-at-source personal pension. Her provider adds basic-rate relief automatically, grossing the contribution up to £15,000 in her pension pot (£12,000 × 1.25).

• Adjusted net income after the contribution: £115,000 − £15,000 = £100,000
• Personal Allowance restored in full: £12,570

Because the £7,500 of restored allowance would otherwise have been taxed at the 40% higher rate, Priya saves a further £3,000 in tax when she claims this on her Self Assessment return (£7,500 × 40%), on top of the £3,000 basic-rate relief her pension provider already added, and on top of a further £3,000 of higher-rate relief she can claim on the rest of the gross contribution (20% × £15,000). In total, £9,000 of the £15,000 that lands in her pension comes from tax relief, made up of the taper-restoration saving plus the standard basic and higher-rate pension relief, for a net cost to Priya of £6,000.

A salary sacrifice arrangement would achieve the same £100,000 adjusted net income by reducing her gross salary directly, without needing the 1.25 grossing-up step, since sacrificed salary is never counted as income in the first place - see the comparison table below.

This example uses the Income Tax rates and thresholds that apply in England, Wales and Northern Ireland. Scottish Income Tax has different bands and rates, so the cash value of restoring the Personal Allowance differs for a Scottish taxpayer, though the £100,000 threshold and the £1-per-£2 taper itself are set at UK level and work the same way. This example is illustrative only and isn't personalised financial advice.

Sarah earns £72,000 in 2026/27 and has two children. She claims Child Benefit for both: £27.05 a week for the eldest, £17.9 a week for the second, which comes to around £2,337 across the year using the standard weekly rates.

Sarah's salary is her only income, so her adjusted net income is £72,000, which is £12,000 above the £60,000 HICBC threshold.

• Charge: 1% of Child Benefit received for every £200 above £60,000
• £12,000 ÷ £200 = 60, so the charge is 60% of £2,337 ≈ £1,402

Sarah's employer offers a salary sacrifice pension scheme. She agrees to sacrifice £12,000 of salary into her pension.

• Adjusted net income after sacrifice: £72,000 − £12,000 = £60,000
• HICBC: £0, since adjusted net income no longer exceeds the £60,000 threshold
• Child Benefit kept in full: around £2,337, instead of losing roughly £1,402 of it

On top of keeping her full Child Benefit, the £12,000 sacrificed into her pension attracts full Income Tax relief at her marginal rate automatically, because salary sacrifice reduces her taxable pay before tax is calculated rather than requiring a separate relief claim, and both she and her employer save National Insurance on the sacrificed amount too. The combined effect, the Child Benefit retained plus the tax and National Insurance relief on the contribution itself, means the true cost of directing £12,000 into her pension is considerably less than £12,000 in reduced take-home pay.

This example is illustrative only, based on the figures shown, and isn't personalised financial advice. Your own position depends on your full income, any Gift Aid or other pension contributions already made, and, for couples, whichever partner has the higher adjusted net income.

Because relief-at-source pension contributions and Gift Aid donations are both grossed up before they're subtracted, a given cash amount reduces adjusted net income by more than the amount you actually paid, which is worth knowing if you're trying to reach a precise threshold like £100,000 or £60,000 rather than just reducing income generally.

If you want to see exactly how a specific pension sacrifice amount changes your take-home pay and National Insurance, rather than the allowance and threshold effects covered here, use the salary sacrifice pension calculator. Other salary sacrifice arrangements, not only pension contributions, such as cycle-to-work or childcare schemes, also reduce your gross salary and therefore your adjusted net income in the same pound-for-pound way; see the salary sacrifice calculator for how those affect your pay generally.

A note on terminology: working out how much you can pay into a pension this year in total, rather than your Personal Allowance or Child Benefit position? That uses a related but different HMRC test called adjusted income, used only for the tapered pension Annual Allowance, with its own £260,000 threshold. It's easy to confuse the two because of the similar name. See our pension carry forward calculator if that's what you're checking.

This page is written and reviewed by Eman Munir, ACCA.

The estimate applies these tax-year assumptions:

• Your salary figure is the taxable pay before any salary sacrifice, entered separately in its own field, which is deducted pound for pound with no grossing-up. An employer pension contribution has the same pound-for-pound effect and needs no input at all, since it's never part of your taxable salary in the first place.
• Gift Aid donations and relief-at-source pension contributions are grossed up at the basic rate of 20% (a multiplier of 1.25), which applies UK-wide regardless of which Income Tax bands you'd otherwise pay.
• For the High Income Child Benefit Charge, the percentage, the Child Benefit total used to calculate it, and the resulting charge are each rounded down to the nearest whole number, following section 681C of the Income Tax (Earnings and Pensions) Act 2003.
• Where a couple both claim Child Benefit, enter the adjusted net income of whichever partner earns more, since the charge is based on the higher earner, not combined household income.
• It doesn't expose every niche HMRC adjustment (such as the £100 trade union or police death benefit relief) as a dedicated input; these affect a small minority of cases and aren't modelled here.
• All figures are rounded to the nearest penny, except where noted above.