Fiscal Drag Calculator UK — Compare Tax Years & Real-Terms Take-Home

Compare Tax Years & Fiscal Drag — Same Salary, Different Rules

Did the April 2026 budget leave you better or worse off — and did inflation quietly claw it back? Enter one salary and run it against any two tax years from 2022/23 to 2026/27. Income tax, National Insurance and student loan are calculated under each year's actual rules, and an optional inflation figure reveals the real-terms change — the fiscal drag caused by thresholds frozen to 2031.

What actually changes between tax years

Budgets rarely move the headline rates — the action is in thresholds and side-systems. Between the five years this tool covers, the big shifts were: employee National Insurance falling from its 13.25% peak (2022/23) to 8% (April 2024 onwards); the additional-rate threshold dropping from £150,000 to £125,140 (April 2023); Scotland introducing the 45% Advanced band (April 2024); employer NI jumping to 15% with a £5,000 threshold (April 2025); and student loan thresholds creeping up each year while the personal allowance stays frozen at £12,570.

Worked example: £35,000, 2025/26 vs 2026/27

With headline rates and the allowance frozen, income tax and NI are identical in both years — £4,486 and £1,794.40. The visible difference for a Plan 2 borrower is the student loan threshold, which rose from £28,470 to £29,385: repayments drop from £588 to £505, leaving 2026/27 about £82 a year better. Small — but run the same test against 2022/23 and the NI cuts alone are worth around £1,100.

Comparing years isolates rule changes. To compare two different salaries — a pay rise, a job offer — use compare two salaries instead, or get the full current-year breakdown in the take-home pay calculator.

What is fiscal drag, and why it cuts your real wage

Fiscal drag is what happens when tax thresholds are held still while wages and prices rise. Because the £12,570 personal allowance and the £50,270 higher-rate threshold are frozen until April 2031, every inflation-driven pay rise pushes a larger share of your income above those lines — so you pay a higher average rate of tax without any rule ever changing, and more people are dragged into the 40% band each year. The Office for Budget Responsibility estimates the freeze will create millions of extra higher-rate taxpayers by the time it ends.

The tax rules on their own can leave your take-home flat or even slightly up year on year, yet your real spending power falls. That is why this calculator lets you add the cumulative inflation between the two years: it grows the earlier year's take-home into today's money, so the "real-terms" line shows whether your pay has actually kept up. A nominal rise of a few hundred pounds is often a real-terms cut once 3–4% inflation is applied.

Fiscal drag in one line: if your take-home is £200 higher this year but prices rose 4%, a £30,000 earner is roughly £900 worse off in real terms. The frozen thresholds did the work quietly — no headline rate ever moved.

Fiscal drag bites hardest at the band edges. Around £50,270 a modest rise can tip into 40% tax; between £100,000 and £125,140 it collides with the personal-allowance taper's 60% effective rate. Scottish taxpayers face their own frozen band boundaries — compare the effect north and south of the border with the Scottish take-home pay calculator.

Frequently Asked Questions

What changed in the April 2026 budget for my payslip?

The headline income tax bands and the personal allowance stayed frozen at 2025/26 levels, so most changes to take-home come from student loan threshold uprating (Plan 1 rose to £26,900, Plan 2 to £29,385, Plan 4 to £33,795), Scottish band adjustments and National Minimum Wage increases. Run your own salary through the comparison to see the pounds-and-pence effect.

Why does a frozen personal allowance still cost me money?

Freezing thresholds while wages rise is a stealth tax: each pay rise pushes more of your income above the frozen £12,570 allowance and £50,270 higher-rate threshold. Comparing the same salary across years shows the rules alone; comparing your old salary in the old year with your new salary in the new year shows the real fiscal drag.

How much did the NI cuts change take-home pay?

Employee NI fell from 12% (early 2023/24) to 10% and then 8% from April 2024, where it remains for 2026/27. Against 2022/23 (13.25% at its peak), someone on £35,000 keeps roughly £1,000 a year more in NI alone — select 2022/23 as your comparison year to see it.

Are Scottish tax years compared too?

Yes — toggle Scottish taxpayer and both years use the Scottish band structure in force for that year, including the Advanced band introduced in 2024/25 and the band-boundary uprating in later years.

Which years can I compare?

Any two of the five years from 2022/23 through 2026/27, in either order. The difference column always shows the second year minus the first, so green means the later configuration leaves you better off.

Does the comparison include student loans and pensions?

Yes. Student loan thresholds move most years, which changes repayments even when tax is static — a Plan 2 borrower on £40,000 repays £82 a year less in 2026/27 than in 2025/26 purely from threshold uprating. Pension contributions are applied identically in both years so the tax-rule differences stay isolated.