What is Net Income? UK Definition 2026/27
Quick Answer
Your income after all deductions - what you actually receive.
Definition of Net Income
Net income is your gross income minus all deductions including income tax, National Insurance, pension contributions, and student loan repayments. Its often called take-home pay for employees. For businesses, net income means profit after all expenses and tax. Net income is what you actually receive or retain.
Net Income — Key Facts for 2026/27
| Formula | Gross minus all deductions |
| Also called | Take-home pay |
| Includes deductions | Tax, NI, pension, SL |
| Business meaning | Profit after tax |
How Net Income Works — Example
- 1Gross salary: £50,000
- 2Income tax: -£7,486
- 3National Insurance: -£2,994
- 4Pension (5%): -£2,500
- 5Student loan (Plan 2): -£1,683
- 6Net income: £35,337
How Net Income Affects Your Tax
Net income is what matters for budgeting - its what actually lands in your bank account. When negotiating salary, consider net not gross. Pension contributions reduce net but build future wealth.
Official HMRC Guidance on Net Income
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Income TaxFrequently Asked Questions about Net Income
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.