- A £40,000 salary gives a take-home of about £32,320 a year (£2,693 a month).
- That is £5,486 income tax and £2,194 National Insurance, so you keep about 81%.
- The same £40,000 as a sole trader profit nets roughly £32,868 (slightly more, lower NI).
- As £40,000 of company profit through a limited company, take-home is around £32,049.
- Pension contributions, a non-standard tax code or a student loan all change the net figure.
Calculator
Your £40,000 salary breakdown
For an employee on £40,000 in 2025/26 (England, Wales or Northern Ireland, standard tax code):
- Gross salary: £40,000
- Personal allowance: £12,570 (tax-free)
- Income tax: £5,486
- National Insurance: £2,194
- Take-home: £32,320 a year, £2,693 a month
Income tax is charged at 20% above the £12,570 personal allowance, then 40% above £50,270. National Insurance is 8% between £12,570 and £50,270, then 2% above. The calculator updates instantly if your figure differs.
£40,000: employee vs sole trader vs limited company
The same £40,000 produces a different take-home depending on how you earn it:
- Employee salary: about £32,320. Income tax plus 8%/2% employee National Insurance.
- Sole trader profit: about £32,868. Same income tax, but Class 4 NI is 6%/2% rather than 8%/2%, so you keep a little more.
- Limited company profit: about £32,049. A £12,570 salary plus dividends after corporation tax, the route most owner-managed directors use.
The limited-company figure assumes the profit is fully extracted in the year and no Employment Allowance. Leaving profit in the company, or making a pension contribution, changes it. Our optimal director salary guide works through the choices.
How to keep more of your £40,000
- Pension contributions come off before tax, so they reduce income tax (and for higher earners, can restore some personal allowance).
- Salary sacrifice for pension also cuts National Insurance, which a personal contribution does not.
- Sole traders should claim every allowable expense, covered in our allowances guide.
- Directors can tune the salary and dividend mix, see the dividend tax calculator.
Take Home models all of these against your real income, so you see your actual take-home rather than a salary-only estimate.