Calculate the value of a pay rise. See your new salary, the annual increase and the monthly difference instantly.
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To calculate a salary increase, multiply your current salary by the pay-rise percentage, then add the result to your current salary. For example, a 5% rise on £40,000 is £40,000 × 0.05 = £2,000, giving a new salary of £42,000 (about £167 more per month before tax). These are gross figures — your actual take-home rise will be lower once Income Tax and National Insurance are deducted.
Work out a salary increase in three steps. First, convert the percentage to a decimal by dividing it by 100 (so 5% becomes 0.05). Second, multiply your current salary by that decimal to get the annual increase in pounds. Third, add the increase to your current salary to get your new gross salary.
The formula is: New salary = Current salary × (1 + increase ÷ 100). To find the increase amount on its own, use: Increase = Current salary × (increase ÷ 100). The calculator above does both instantly and also splits the rise into a monthly figure so you can see the real-world difference in each pay packet.
Say you earn £40,000 and you are offered a 5% pay rise. Multiply £40,000 by 0.05 to get a £2,000 annual increase. Add that to £40,000 and your new salary is £42,000. Spread across 12 months, that is roughly £167 a month more before deductions.
Because Income Tax (20% at the basic rate) and National Insurance also apply to the extra pay, the amount that actually reaches your bank account is closer to £110–£135 a month. Always check whether a quoted rise is gross (before tax) or net (take-home) — employers almost always quote gross.
A pay rise only increases your spending power if it beats inflation. If prices are rising 3% a year and you get a 3% rise, your "real" pay is flat — you can buy exactly the same as before. A rise below the inflation rate is effectively a pay cut in real terms.
As a rough UK benchmark, typical annual pay settlements have hovered around 3–5% in recent years, so a rise in that range is broadly in line with the market, while anything above it is a real-terms gain. Use the figure as a negotiating anchor rather than a hard rule — your industry, role and location all shift what counts as a strong offer.
| Current salary | +2% | +3% | +5% | +10% |
|---|---|---|---|---|
| £20,000 | £20,400 | £20,600 | £21,000 | £22,000 |
| £25,000 | £25,500 | £25,750 | £26,250 | £27,500 |
| £30,000 | £30,600 | £30,900 | £31,500 | £33,000 |
| £40,000 | £40,800 | £41,200 | £42,000 | £44,000 |
| £50,000 | £51,000 | £51,500 | £52,500 | £55,000 |
A 5% pay rise on £30,000 is an extra £1,500 a year, taking your gross salary to £31,500 — about £125 more per month before tax. After Income Tax and National Insurance, the take-home increase is roughly £85–£100 a month.
Multiply your current salary by the rise percentage divided by 100 to get the increase, then add it to your current salary. For a 4% rise on £35,000: £35,000 × 0.04 = £1,400, so your new salary is £36,400.
A 3% pay rise is around the typical UK average, so it is a fair but not standout offer. Whether it is "good" depends on inflation: if prices are rising faster than 3%, your real spending power falls slightly, which is worth raising when you negotiate.
No. A higher salary always leaves you with more take-home pay — you only ever pay the higher tax rate on the portion of income above each threshold, never on your whole salary. A rise that pushes you into the higher-rate band still increases your net pay overall.
Yes. This salary increase calculator is completely free to use, with no sign-up required. It is one of more than 160 free business tools built by InstaWebsite for UK small businesses and employees.
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