Methodology & sources

This tool models the UK income-tax, employee-NI and pension annual allowance interactions for someone planning a corporate exit within a given tax year. It is specifically about pension structuring of final-year compensation; it is not a general-purpose take-home pay calculator and is not a redundancy/severance calculator.

What is modelled

• Income tax — England & Wales bands for 2026/27. Personal allowance £12,570, tapered £1 per £2 over £100,000 (fully lost at £125,140). Basic rate 20%, higher rate 40%, additional rate 45%.
• Employee National Insurance — Class 1: 8% between £12,570 and £50,270, 2% above.
• Pension annual allowance — £60,000 for 2026/27. Tapered £1 per £2 of adjusted income over £260,000 (subject to threshold income exceeding £200,000), floor £10,000 at adjusted income ≥ £360,000.
• Carry-forward — unused AA from the 3 prior tax years. Current year used first; oldest prior year next; then progressively newer years.
• Salary sacrifice — reduces gross taxable salary, cutting both income tax and employee NI. The primary lever for ducking the 60% taper band.
• RSU vests — treated as employment income at market value on vest date, with PAYE income tax and Class 1 NI. Section 431 election assumed.

What is NOT modelled

• Scotland and Northern Ireland tax bands. (NI bands match E&W; Scottish bands differ.)
• Defined benefit pension input amounts. Assume DC schemes only.
• Money Purchase Annual Allowance (MPAA) — applies if you've flexibly accessed a DC pot. Not modelled.
• LSA / LSDBA (post-LTA lump sum allowances).
• Post-vest RSU gain/loss — CGT territory. Out of scope.
• Termination payments, statutory redundancy, PILON / PENP, the £30k exemption. Not part of the “leave on your own terms” question.
• Cross-tax-year planning. To compare two tax years, run the tool twice.
• Annual Allowance Charge calculation on excess contributions — the over-allowance amount is flagged but not auto-taxed.
• Employer NI savings (don't affect employee take-home).

Simplifying assumptions

• Both employee “salary sacrifice” and “RAS” percentages are treated as gross-equivalent sacrifice (i.e. reduce taxable income directly). In real life RAS works via basic-rate-at-source plus higher-rate relief on self-assessment — same end-result on tax due, slightly different cashflow.
• Employer pension contributions are annualised on base salary at the user's stated percentage.
• NI is computed annually rather than per pay-period.
• Threshold and adjusted income for AA taper are approximated as: threshold = taxable income after sacrifice; adjusted = threshold + all pension contributions (employee + employer).

Authoritative sources

• gov.uk — Income tax rates and Personal Allowance
• gov.uk — National Insurance rates & categories
• HMRC Pensions Tax Manual — Annual Allowance (PTM050000)
• HMRC PTM057100 — Tapered annual allowance
• HMRC EIM11875 — Employment-related securities (RSUs)

Disclaimer

This is an educational tool. Tax rules change, edge cases abound, and your actual position depends on the full picture of your tax affairs (foreign income, capital gains, salary-sacrifice eligibility, scheme rules, etc). Verify against HMRC guidance and consult a chartered tax adviser or a regulated financial planner before acting on anything shown here. The author is not a tax adviser.

Privacy

No accounts, no cookies, no server-side storage. Your inputs are encoded in the URL query string; that's where the “state” lives. You can bookmark a scenario, share it, or close the tab and there's nothing to delete.

Data version

Tax-year data file: 2026_27. Last reviewed against gov.uk: 2026-05. Thresholds carried forward under the Autumn Statement 2022 freeze (through 5 April 2028); pension AA unchanged since April 2023.