The short version: Net income is what you actually take home after tax and National Insurance have been deducted. It’s the money that lands in your bank account, not the headline salary figure.
How is it different from gross income?
Gross income is your total earnings before any deductions. Net income is what’s left after Income Tax, National Insurance, pension contributions, student loan repayments, and anything else that gets taken off.
Why does it matter?
Your gross salary sounds good on paper, but your net income is what you actually live on. Understanding the difference helps you budget properly and avoid surprises when you see your payslip.
How do you work it out?
For employees, your payslip shows the breakdown. For self employed people, it’s your profit after deducting business expenses, then subtracting Income Tax and National Insurance from that.
Can you increase your net income?
Pension contributions reduce your taxable income, which can mean paying less tax. Using your ISA allowance shelters savings from tax. Claiming all your allowable expenses if you’re self employed keeps your taxable profit lower.
Want to understand your take home pay better? Let’s look at the numbers together.
