Quick answer
- Do not judge a pay rise or new salary by the headline number only.
- Check monthly net pay, not just annual gross pay.
- Compare working hours, commute, pension, benefits, bonus and contract terms.
- Check whether the increase beats inflation and improves your real spending power.
- Use calculators to compare the new salary, take-home pay and hourly value before deciding.
A pay rise or new salary can look straightforward, but it can affect more than your monthly payslip. The best comparison is not simply “old salary vs new salary”. It is “old overall package vs new overall package”.
Start with the headline increase
Use the pay rise calculator to compare old salary, new salary and percentage change.
1. Check the headline salary increase
Start with the simple calculation: how much more is the new salary compared with the old salary? This gives you the annual increase, monthly gross increase and percentage rise.
The percentage matters because a £2,000 rise means different things at different salary levels. A £2,000 rise on £25,000 is an 8% increase, while £2,000 on £50,000 is a 4% increase.
annual increase = new salary - old salary
percentage increase = annual increase ÷ old salary × 100
Current gross salary.
Proposed gross salary.
Extra gross pay per year.
Headline pay rise.
2. Estimate the take-home pay difference
Gross salary is the headline number. Take-home pay is the amount that actually reaches your bank account after PAYE Income Tax, National Insurance, pension, student loan deductions and other payroll deductions.
A pay rise does not usually arrive in your bank account pound-for-pound. Deductions can increase as salary rises, especially where higher-rate tax, student loan repayments or pension percentages apply.
Check monthly net pay
Compare old monthly take-home pay with estimated new monthly take-home pay.
Check deductions
Look at tax, NI, pension, student loan, benefits and any one-off deductions.
Calculate the after-tax result
Enter the new salary into the take-home pay calculator to estimate monthly net pay.
3. Compare the hourly value
A higher salary can be less impressive if it comes with longer hours. To compare properly, work out the hourly equivalent of both roles.
If one job pays £40,000 for 35 hours and another pays £43,000 for 45 hours, the second job has a higher salary but may have a lower hourly value.
hourly rate = annual salary ÷ (weekly hours × paid weeks per year)
Compare salary by hourly rate
Use salary, weekly hours and weeks worked to see the hourly equivalent.
4. Check whether the rise beats inflation
A pay rise can be positive in cash terms but still negative in real terms if prices rise faster than salary. That is why it helps to compare the increase with inflation.
For example, a 3% pay rise during a period of 5% inflation may leave you with less spending power, even though your salary is higher.
Check real-terms pay
Compare your proposed salary with the salary needed to keep up with inflation.
5. Check pension contributions
Pension contributions can change when salary changes. If contributions are percentage-based, a higher salary may mean a higher pension deduction and a higher pension contribution.
Also check whether the employer contribution improves. A role with a slightly lower salary but a much better pension can sometimes be worth more over time.
Employee contribution
Will your monthly pension deduction increase with the new salary?
Employer contribution
Does the employer add a fixed percentage, matched contribution or enhanced benefit?
If salary sacrifice is available, compare how it affects take-home pay, pension value, National Insurance and salary-linked benefits.
6. Compare benefits, bonus and perks
Salary is only one part of the package. Benefits can change the true value of a job offer or internal pay rise.
- Bonus: is it guaranteed, discretionary, personal performance-based or company performance-based?
- Pension: what does the employer contribute?
- Holiday: how many days are included, and are bank holidays included?
- Sick pay: is it statutory only or enhanced company sick pay?
- Private medical cover: is it included, and is it a taxable benefit?
- Car allowance: is it cash, company car, mileage reimbursement or something else?
- Flexible working: can it reduce commuting cost and improve quality of life?
7. Check extra costs
A higher salary can be reduced by extra costs. Before accepting, compare what the new role costs you each month.
| Cost | What to check | Why it matters |
|---|---|---|
| Commuting | Train, fuel, parking, tolls, car wear and time. | Can reduce the real monthly gain. |
| Childcare | Longer hours, office days or shift pattern changes. | Can offset a large part of a pay rise. |
| Equipment | Home office, clothing, tools, subscriptions or travel. | May be partly or fully your responsibility. |
| Location | Lunch, travel, relocation or city-centre costs. | Everyday costs can add up over a year. |
8. Read the contract terms
A new salary should be checked alongside the employment contract. Some terms can affect how valuable or risky the offer is.
- Notice period: a longer notice period can affect future job moves.
- Probation: check salary, benefits and notice during probation.
- Working pattern: confirm hours, hybrid working, travel and on-call expectations.
- Bonus wording: check whether bonus is guaranteed or discretionary.
- Overtime: confirm whether extra hours are paid, unpaid or time off in lieu.
- Restrictive covenants: check non-compete or non-solicitation clauses if relevant.
Check notice implications
If the offer affects your current resignation timing, estimate your notice period.
9. Watch for payroll and tax surprises
Some salary changes have side effects that are easy to miss. They may not mean the salary is bad, but they should be understood before you rely on the monthly number.
- A bonus month can produce a higher tax or student loan deduction in that payslip.
- A tax code change can alter take-home pay even if salary stays the same.
- Higher pension deductions can reduce the immediate net increase.
- Salary sacrifice can improve efficiency but may reduce contractual salary.
- Crossing a student loan threshold can create or increase repayments.
- Benefits in kind may affect tax codes or future deductions.
Final checklist before accepting
Before you say yes, write down the old package and new package side by side.
| Check | Old role | New role / pay rise |
|---|---|---|
| Gross annual salary | Current salary | New salary |
| Estimated monthly net pay | Current take-home | New take-home |
| Weekly hours | Contracted and realistic hours | Contracted and realistic hours |
| Hourly equivalent | Salary ÷ annual hours | Salary ÷ annual hours |
| Pension and benefits | Current value | New value |
| Costs and commute | Current monthly cost | New monthly cost |
| Real-terms impact | Current spending power | Inflation-adjusted change |
Related glossary terms
These terms help explain salary offers, payslips and take-home pay.
Pay rise and new salary FAQs
Should I accept a pay rise straight away?
You can, but it is sensible to check the take-home impact, hours, benefits, pension, costs and inflation before deciding whether the increase is as good as it looks.
Why is my pay rise smaller in my bank account?
Because extra gross pay can also increase Income Tax, National Insurance, pension contributions, student loan repayments or other payroll deductions.
Is a higher salary always better?
Not always. A higher salary can be offset by longer hours, weaker benefits, higher commuting costs, less flexibility or lower pension contributions.
What calculator should I use first?
Start with the pay rise calculator for the headline increase, then use the take-home pay calculator and salary-to-hourly calculator for a fuller comparison.