The full breakdown
On a £60,000 gross salary with a Plan 2 student loan, you'll pay:
- Income Tax: £9,486 per year (£790 per month)
- National Insurance: £5,164 per year (£430 per month)
- Student Loan (Plan 2): £2,943 per year (£245 per month)
This means your annual take-home pay is £42,407, which works out to £3,534 per month or £815 per week.
Understanding the higher rate tax threshold
With a £60,000 salary, you'll pay basic rate tax (20%) on earnings between £12,570 and £50,270, and higher rate tax (40%) on the remaining £9,730. This is why your tax bill jumps significantly compared to someone earning just below £50,270.
Student loan Plan 2 repayments
If you started university in England or Wales in September 2012 or later, you're likely on Plan 2. You repay 9% of everything you earn above £27,295. On a £60,000 salary, that means you're paying 9% on £32,705, which equals £2,943 per year or £245 per month.
The good news? Student loan repayments are automatically deducted from your salary through PAYE, so you don't need to manage them yourself. Plus, any remaining balance is written off after 30 years.
What about pension contributions?
Most employers offer a workplace pension scheme. If you contribute the typical 5% (£3,000 per year), this would reduce your take-home pay by approximately £250 per month, but you'd benefit from employer contributions and tax relief, making it a smart long-term investment.
Maximizing your take-home pay
There are legitimate ways to increase your net income, such as salary sacrifice schemes for pensions or childcare vouchers. These reduce your taxable income, potentially saving you hundreds of pounds per year.