Know your take-home
to the penny.

Salaried vs. hourly contracts: pick the payroll route that matches your wage

Not every UK income passes through PAYE in the same way. Before projecting a monthly net figure for the 2026/27 tax year, it matters whether your gross arrives as a guaranteed annual salary or as variable hours invoiced week-by-week. The two routes apply the same HMRC rates, but they hit National Insurance thresholds, holiday-pay accruals and tax-code allowances on completely different schedules — so picking the wrong calculator can leave a payslip looking right on paper and wrong in your bank account.

How each route handles National Insurance limits

On a fixed annual salary your employer's payroll engine charges Class 1 employee NI at 8% on earnings between the Primary Threshold and the Upper Earnings Limit (£12,570 to £50,270 on the annual scale), then 2% on anything above. Because the monthly slice of that threshold is identical every period, total NI for the year is predictable down to the penny.

Hourly and weekly contracts work differently. HMRC's Real Time Information rules require NI to be assessed against the weekly Primary Threshold of £242 on each individual payslip — not against the annual total. A spike of overtime in a single week can push that week into the 8% band even if your full-year earnings would sit comfortably below the £50,270 higher-rate boundary. The hourly calculator mirrors that per-period assessment so the numbers match the deductions your payroll software will actually produce.

Holiday pay, tax codes and statutory minimums in 2026/27

For salaried workers, holiday is invisible inside the payslip — your contracted gross continues during annual leave, and the 1257L tax code keeps allocating the Personal Allowance on the same cumulative schedule. For variable-hour roles, holiday pay is accrued at the statutory 12.07% rate against hours actually worked, either banked and paid out when leave is taken or rolled into an enhanced hourly rate under a written agreement.

Tax-code application also diverges. Permanent staff carry the same cumulative code from payslip to payslip, so unused allowance from a light month tops up the next. Irregular contracts are frequently put on a non-cumulative (Week 1 / Month 1) code that resets the allowance each period — efficient for unpredictable patterns, but it can leave overpaid PAYE to reclaim at year end. Either route still respects the regional prefix on your code: an 'S' prefix routes earnings through Scotland's six-band system, while a 'C' prefix applies the Welsh rates that currently mirror the rest-of-UK bands of £50,270 and £125,140.

With the Personal Allowance and higher-rate threshold frozen across England, Wales and Northern Ireland for another year, fiscal drag is moving more workers into the 8% and 40% bands without any nominal pay rise. Running both your salaried baseline and any side contracts through the matching calculator is the most reliable way to audit a payslip before the deductions are taken.