£40,000 Salary Breakdown (2025/2026)

£40,000 Salary Overview

A salary of £40,000 places you significantly above the UK national average. You are still within the Basic Rate (20%) tax band, which means you keep a large portion of your earnings compared to higher earners.

Tax Breakdown for £40k

Assuming you have no other income and the standard 1257L tax code:

  • Taxable Income: £27,430 (Total salary minus £12,570 allowance).
  • Income Tax: 20% of taxable income = ~£5,486 per year.
  • National Insurance: 8% on earnings between £12,570 and £40,000 = ~£2,194 per year.

Student Loan Impact

If you have a student loan, the deductions at £40k are substantial:

  • Plan 1: Approx. £1,250/year deducted (~£104/month).
  • Plan 2: Approx. £1,030/year deducted (~£86/month).
  • Postgraduate: Approx. £1,140/year deducted (~£95/month).

Looking Ahead

At £40,000, you are getting closer to the Higher Rate tax threshold (£50,270). Any bonuses or overtime might eventually push you into the 40% tax bracket, at which point looking into salary sacrifice pension schemes becomes very tax-efficient.