Your First Salary: A Real Breakdown of Tax, NI, Student Loan and Pension Deductions

You land your first graduate job. The offer letter says £30,000. You do the quick maths, that is about £2,500 a month. And then your first payslip arrives, and the number at the bottom is nowhere near £2,500. What happened?

This is one of the most confusing moments for any new graduate. The gap between your headline salary and what actually lands in your bank account can feel like a shock. But every deduction has a purpose, and once you know what each one is for, your payslip stops looking like a mystery and starts looking like a map.

This guide walks through every deduction on a typical graduate salary of £30,000, using the 2025-2026 tax year rates. We will cover Income Tax, National Insurance, student loan repayments and workplace pension contributions, plus what you can do to make sure nothing is wrong.

Income Tax: The Biggest Deduction

Income Tax is calculated on the portion of your salary that falls above your Personal Allowance, the amount you can earn before any tax is due.

For the 2025-2026 tax year, the standard Personal Allowance is £12,570. Most graduates will have the tax code 1257L, which tells your employer to apply this allowance. You pay 0% tax on this portion, then 20% (the basic rate) on everything you earn between £12,571 and £50,270.

On a £30,000 salary:

• Taxable income: £30,000 minus £12,570 = £17,430
• Income Tax at 20%: £17,430 x 0.20 = £3,486 per year
• That works out to £290.50 per month (rounded to the nearest penny)
  
  

Your effective tax rate on £30,000 is about 11.6%, lower than the 20% rate because of the tax-free Personal Allowance.

One thing to watch: If you started a job partway through the tax year, or if you have more than one job, your tax code may be different. If you think your tax code is wrong, you can check it on the GOV.UK website and report it through your Personal Tax Account.

National Insurance: The Second Deduction

National Insurance (NI) helps fund the NHS, the State Pension and other social security benefits. For employees, it is deducted automatically from your pay.

The key number to know is the Primary Threshold: £12,570 per year (aligned with the Personal Allowance since 2024). You pay 0% NI on earnings below this threshold, and 8% on earnings between £12,571 and £50,270.

On a £30,000 salary:

- Earnings subject to NI: £30,000 minus £12,570 = £17,430

- NI at 8%: £17,430 x 0.08 = £1,394.40 per year

- That works out to £116.20 per month

Because £30,000 is below the Upper Earnings Limit of £50,270, the 2% rate does not apply here.

Student Loan Repayment: Plan Matters

If you studied in England or Wales, your student loan repayment plan depends entirely on when you started your course. There is no choice of plan, and your employer will use the plan that HMRC tells them is correct for you.

Plan 2 (course started between 1 September 2012 and 31 July 2023): You repay 9% of income above £29,385 per year.

Plan 5 (course started on or after 1 August 2023): You repay 9% of income above £25,000 per year.

On a £30,000 salary:

• Plan 2: Income above threshold is £30,000 minus £29,385 = £615. Repayment: £615 x 0.09 = £55.35 per year, roughly £4.61 per month.
• Plan 5: Income above threshold is £30,000 minus £25,000 = £5,000. Repayment: £5,000 x 0.09 = £450 per year, roughly £37.50 per month.

The difference is striking. If you are on Plan 2, your student loan repayment at £30,000 is barely noticeable. If you are on Plan 5, it is a more meaningful deduction. Either way, repayments are calculated on your income, not on how much you owe, and they stop automatically if your income drops below the threshold.

If you studied in Northern Ireland or Scotland, your student loan arrangements are different. Visit the Student Loans Company website for the correct thresholds and repayment plans for your region.

For a full comparison of Plan 2 and Plan 5, including interest rates, write-off periods and what happens if you leave the UK, read our dedicated guide to student loan repayment.

Workplace Pension: What You Get and What It Costs You

If you are over 22 and earn at least £10,000 a year, your employer must automatically enrol you into a workplace pension scheme. This is called auto-enrolment, and it applies to most graduate roles.

The minimum total contribution is 8% of your qualifying earnings, split as:

• Employer pays at least 3%
• You pay at least 5% of your qualifying earnings (this includes tax relief)

Qualifying earnings are the portion of your salary between £6,240 and £50,270. So on a £30,000 salary, your qualifying earnings are £30,000 minus £6,240 = £23,760.

On a £30,000 salary, minimum contributions:

• Your contribution (5% of qualifying earnings): £23,760 x 0.05 = £1,188 per year, roughly £99 per month
• The actual cost to your take-home pay is less, because the government adds 20% tax relief. With most auto-enrolment schemes, you contribute the equivalent of 5% of qualifying earnings, but the government adds 20% tax relief, so the contribution costs you roughly £79 in take-home pay per month.
• Employer contribution (3% of qualifying earnings): £23,760 x 0.03 = £712.80 per year, roughly £59 per month
  
  

That £59 from your employer is money you only get if you stay enrolled. Leaving the pension scheme means giving up that contribution, plus the government tax relief. The GOV.UK pension calculator can help you compare the numbers for your situation.


Some schemes use a "net pay" arrangement instead of "relief at source", in that case, your contribution is deducted before tax is calculated, so the effect on your take-home pay is the same but the mechanics differ. Your employer's pension documentation will say which type your scheme uses.


Many graduate schemes offer contributions above the legal minimum, so check your scheme, your employer might be paying more than the 3% minimum.

The Full Picture: Where Your £30,000 Goes

Here is the complete monthly breakdown for a graduate earning £30,000, assuming they are enrolled in the pension and on Plan 2 student loan:

If you are on Plan 5 instead, the student loan deduction rises to £37.50, bringing take-home pay to roughly £1,957 per month.

What if you opt out of the pension? Your take-home pay would be roughly £2,089 on Plan 2, or £2,056 on Plan 5. That extra £99 a month might feel tempting, but remember you are giving up your employer's contribution and the government tax relief. Over time, that adds up to a significant amount of money that could have been growing in your pension pot.

What To Do Next

Check your tax code. The most common tax code for graduates is 1257L. If yours is different, check why. An incorrect tax code can mean you are paying too much or too little tax.

Consider your pension options carefully. The employer contribution is worth at least 3% of your qualifying earnings, on top of the government tax relief. Even a small pension pot built in your twenties benefits from decades of growth. Use the GOV.UK pension calculator to see the numbers for your specific situation.

Use the GOV.UK take-home pay calculator. The official government calculator is free and lets you run your own numbers. It is the most reliable way to check your payslip is correct.

If your student loan deduction looks wrong, check your plan type. Your employer should be using the correct plan. If you are on Plan 2 and seeing a large deduction, or on Plan 5 and seeing no deduction at all, it is worth investigating.

Remember that these figures cover England, Wales and Northern Ireland for tax and NI purposes. If you work in Scotland, the income tax bands and rates are different. You can find the Scottish rates on the GOV.UK website. For student loans, the figures shown apply to England and Wales, Northern Ireland and Scotland have separate arrangements.

Your first payslip can feel like a puzzle, but each piece has a logic behind it. Understanding the breakdown means you can plan your budget, check for errors and make informed decisions about your money from day one. That is a skill that will serve you for your entire career.

Sources

[1] [GOV.UK Income Tax Rates](https://www.gov.uk/income-tax-rates) — Personal Allowance and tax bands

[2] [GOV.UK National Insurance Rates](https://www.gov.uk/national-insurance-rates-letters) — thresholds and contribution rates

[3] [GOV.UK Student Loan Repayment](https://www.gov.uk/repaying-your-student-loan/what-you-pay) — Plan 2 and Plan 5 thresholds

[4] [GOV.UK Student Loans Terms and Conditions 2026–2027](https://www.gov.uk/government/publications/student-loans-a-guide-to-terms-and-conditions/student-loans-a-guide-to-terms-and-conditions-2026-to-2027) — detailed plan rules

[5] [House of Commons Library: Student Loan FAQs](https://commonslibrary.parliament.uk/research-briefings/cbp-10654/) — interest rates and repayment thresholds

[6] [GOV.UK Workplace Pensions](https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay) — auto-enrolment minimum contributions

[7] [Graduate Labour Market Statistics 2024](https://explore-education-statistics.service.gov.uk/find-statistics/graduate-labour-market-statistics) — median graduate salary data

[8] [GOV.UK National Minimum Wage Rates](https://www.gov.uk/national-minimum-wage-rates) — NLW rates