How to Use the Pay Rise Calculator
The Pay Rise Calculator shows you the real value of any salary increase — not just the headline percentage, but what it means per week, per month, per year, and crucially, the real increase after accounting for inflation. It cuts through the marketing of pay negotiations to show you what you're actually gaining.
Enter your current salary and the proposed new salary (or percentage increase). The calculator shows the nominal increase in pounds/dollars per year, month, and week, then adjusts for your chosen inflation rate to show the real increase in purchasing power.
The most critical nuance is real vs nominal pay rises. A 3% pay rise during 5% inflation is actually a 2% pay cut in real terms — you can buy less with your new salary than your old one. Many workers accept below-inflation pay rises without realising they're effectively taking a cut.
📊 Worked Example
Salary rising from £38,000 to £40,500 (6.6% rise), inflation at 3%:
- Annual increase: +£2,500
- Monthly increase: +£208
- Weekly increase: +£48
- Real increase after 3% inflation: +3.6% / +£1,342 real
Common Use Cases
- ✅ Evaluating whether a pay rise offer is genuinely good
- ✅ Negotiating a salary increase with a clear understanding of the real value
- ✅ Calculating the monthly and weekly impact of a pay rise
- ✅ Comparing a pay rise with the current inflation rate
- ✅ Planning budget changes following a salary increase
- ✅ Comparing pay rise offers from different employers
Frequently Asked Questions
What is a good pay rise percentage?
A pay rise is genuinely valuable if it exceeds inflation. With UK inflation averaging 2–4% in recent years, a 5%+ rise represents a real improvement. During the 2022–2023 inflation surge (CPI peaking at 11%), a 5% rise was actually a 6% real pay cut. Always compare your rise to current inflation.
How do I calculate a percentage pay rise?
Percentage increase = (New Salary − Old Salary) ÷ Old Salary × 100. For example: (£42,000 − £40,000) ÷ £40,000 × 100 = 5%. Alternatively, new salary = old salary × (1 + percentage/100), so a 5% rise on £40,000 = £40,000 × 1.05 = £42,000.
Does a pay rise affect National Insurance or income tax?
If your raise keeps you within the same tax band, your marginal rate stays the same. If it pushes you into a higher band, only the income above the threshold is taxed at the higher rate. In 2025/26 UK, the 40% rate begins at £50,270. Your NI rate also changes at different thresholds.
When is the best time to ask for a pay rise?
Optimal times: after a major achievement or project success, during annual performance review, when you've taken on significantly more responsibility, when you have competing offers, or when your employer's business is doing well. Research market rates first so your request is grounded in data.
How do I calculate the real value of a pay rise after tax?
Multiply the gross increase by (1 − marginal tax rate − NI rate). In the UK for a basic-rate taxpayer: £2,000 gross rise × (1 − 20% tax − 8% NI) = £2,000 × 0.72 = £1,440 net annually. For a higher-rate taxpayer: £2,000 × (1 − 40% − 2%) = £2,000 × 0.58 = £1,160 net.