Assumptions

1. Standard PAYE conditions

We assume you are taxed under the Pay As You Earn (PAYE) system as a UK employee or director, with tax and NI deducted at source by an employer or umbrella company that uses HMRC-compliant payroll software. The Salary Sacrifice and Contractor calculators apply the same PAYE model — the contractor figure is the equivalent perm-employee gross, not a limited-company dividend / salary split.

2. Even monthly distribution

HMRC's actual cumulative PAYE process gives you 1/12 of your PA each month and reconciles over the tax year. We do not simulate this month-by-month — we compute the annual liability and divide by 12 for the monthly figure, by 52 for weekly, and by your working-day count for the daily contractor figure. The annual number is correct; the monthly number is the steady-state average and may differ from your actual payslip in any single month, especially the first and last months of the tax year.

3. NI Category A

Class 1 employee NI is computed at Category A rates: 8% on earnings between the Primary Threshold (£12,570) and the Upper Earnings Limit (£50,270), 2% above the UEL. We do not currently model:

• Category B (reduced rate, married women / widows election);
• Category C (state pension age and above — exempt);
• Category H, J, M, Z (deferred / under-21 / apprentice variants).

If your payslip shows a category other than A, the NI figures here will be incorrect. The income tax figures will still be reliable.

4. Tax code default — 1257L

The Salary Calculator defaults to the standard cumulative tax code 1257L, representing the full £12,570 Personal Allowance on a cumulative basis. Common overrides in the Advanced Settings:

• Number portion — change to reflect any employer-issued adjustment notice; the calculator derives PA from the number × 10.
• Suffix M — Marriage Allowance recipient (£1,257 transferred in from a partner).
• Suffix N — Marriage Allowance giver (£1,257 transferred out).
• Suffix T — special / personal allowance review required; we treat this as a flat PA-from-number rule, identical to L.

We do not model BR, D0, D1, 0T, K-codes or week-1/month-1 non-cumulative variants. If HMRC has issued you one of those, treat SalaryGrid's figures as the cumulative end-of-year reconciliation, not your current-month deduction.

5. Personal Allowance — what we do and don't apply

We apply automatically:

• The £12,570 standard Personal Allowance for 2026/27;
• The £100,000–£125,140 taper, reducing PA £1 for every £2 above £100k;
• Marriage Allowance (+£1,257) when the M-suffix code is entered and the partner's salary is below PA and the recipient stays in the basic-rate band.

We do not apply (unless you override the PA figure manually):

• Blind Person's Allowance (£3,130 for 2026/27). Override your custom PA to £15,700 if eligible.
• Higher PA for older taxpayers — the age-related allowance was abolished in 2016 but you may still have remnants if HMRC has issued you a bespoke code.
• Dividend allowance, savings allowance, trading allowance, property allowance — they sit outside the PAYE codeword.

6. Salary sacrifice — what counts

The pension input in our calculators is modelled as a salary-sacrifice contribution: it reduces both income tax and NI base. This is the right model if:

• You have a contractual variation in writing with your employer;
• The contribution is taken from gross by the employer pre-payslip;
• Your remaining gross stays above National Minimum / Living Wage for your hours.

If your scheme is a net pay arrangement (deducted from gross before tax but after NI, common in occupational pensions), our model overstates the take-home benefit. If it's a relief-at-source personal pension (paid from net, 20% reclaimed by the provider), set the pension input to 0% in the Salary Calculator and use the /salary-sacrifice view to compare against a sacrifice equivalent.

7. Contractor calculator — billing year

The contractor view defaults to 8 hours/day × 5 days/week × 46 weeks/year = 230 working days. The 46 weeks accounts for typical UK contractor leave: ~3 weeks of statutory bank holidays, ~2 weeks of unbillable illness / appointments, ~4 weeks unpaid leave or training. Override any of those three knobs in the Advanced Settings.

For hourly employees the same engine applies, with optional overtime entries at 1.5× and 2× the base hourly rate, billed weekly across the same number of working weeks.

8. Things we deliberately don't model

• Benefits-in-Kind (company car, private medical) — these come out of your PA via a tax-code adjustment that you'd enter manually as a reduced custom PA.
• P11D items, including beneficial loans, accommodation, vouchers.
• Share-based incentives — RSUs, SAYE, EMI, CSOP exercises.
• Dividend income, savings income, foreign income, property income.
• Capital Gains Tax and the £3,000 annual exemption.
• IR35 inside / outside deeming — the contractor calc treats your gross as standard PAYE on the converted figure.
• Childcare vouchers (legacy scheme), tax-free childcare top-ups, the £3,600 limit on certain BIK rules.
• Self-Assessment payments on account for next year's tax bill.
• Class 2 / Class 4 NI for self-employed earners.
• Pension annual allowance taper at high incomes — we don't yet check that your sacrifice would breach the £60,000 / tapered AA.