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Job Offer vs Current Salary — Use This Before You Say Yes
6 min read
Your boss just approved a £5,000 pay rise. You're delighted. Then payday arrives and you're baffled — it barely moved. Here's exactly why, with the numbers.
The Basic Rate Taxpayer (earning £30k–£50k)
If you're a basic rate taxpayer, on every extra £1 you earn HMRC takes:
- Income Tax: 20p
- National Insurance: 8p
- Pension (5% auto-enrolment): ~5p
Total deductions: ~33%. So a £5,000 pay rise leaves you with roughly £3,350 extra per year — about £279 per month. Not £417.
Add a Student Loan (Plan 2)
If you're repaying a Plan 2 student loan (threshold £29,385), add another 9% deduction. That takes total deductions to ~42%, leaving you with just £2,900 of the £5,000 raise — £242/month.
The Higher Rate Taxpayer (earning near £50,270)
If your salary crosses £50,270, earnings above that threshold are taxed at 40%. If your raise pushes you over the threshold — say from £48,000 to £53,000 — the portion above £50,270 (£2,730) is taxed at 40% + 2% NI = 42%, while the remainder is taxed at 28%. The blended effective take-home from your £5,000 rise could be as low as £3,100.
The Child Benefit Cliff
If you claim Child Benefit and the pay rise takes you from £58,000 to £63,000, you'll start repaying Child Benefit at 1% per £200 over £60,000 (£150/year for £3,000 over the threshold). This effectively makes your raise even more expensive.
What To Do Instead
If the extra cash isn't reaching your pocket, consider asking your employer to pay part of the raise into your pension via salary sacrifice. A £2,000 pension sacrifice + £3,000 pay rise gets you more pension wealth AND keeps you in a lower tax band, potentially saving you more overall.
Frequently Asked Questions
Should I ask for a bigger raise to compensate?
Yes — and now you have the numbers to explain why. If you want £3,350 more per month, you need to ask for roughly £5,000 gross (basic rate). Use our calculator to work out exactly what gross increase you need to achieve your target take-home.
Does my employer know how much I actually keep from my raise?
Often, no. Managers who haven't checked a payslip recently can be shocked to see the numbers. Bringing the calculation to a salary negotiation is genuinely powerful.
Compare exact take-home at different salary levels with our Salary Comparison Calculator.