What's My Take Home Pay? Busting Myths About Hourly Pay and Overtime

If you've ever typed "what's my take home pay" into a search engine, you know the answer isn't always straightforward. Many people assume that multiplying an hourly rate by 40 hours and 52 weeks gives a reliable annual salary, or that overtime is always paid at time-and-a-half. In reality, UK pay is shaped by tax codes, National Insurance thresholds, holiday pay rules, and the way your employer structures overtime. Let's separate fact from fiction.

Myth 1: Annual salary = hourly rate × 40 hours × 52 weeks

Most full-time roles in the UK are based on a 37.5-hour week, not 40. Using 37.5 hours is standard for many office jobs, while retail and hospitality often use 40 hours. The conversion formula is straightforward: annual gross pay = hourly rate × weekly hours × 52 weeks. For example, at the 2026/27 National Living Wage of £12.71 per hour for those aged 21 and over, a 37.5-hour week gives £24,784.50 a year before tax. At £20 per hour, it's £39,000.

But watch out: some payrolls use 52.14 weeks (the exact number of weeks in a year) instead of 52. This adds about 0.3% to your annual total. Also, if your holiday pay is rolled into your hourly rate (common for zero-hours contracts), the headline figure is higher than your true rate for hours worked. Always check your contract.

Myth 2: Overtime is always time-and-a-half

There is no legal right to a premium rate for overtime. Your contract may specify time-and-a-half, double time, or plain time. The legal minimum is the National Minimum Wage or National Living Wage for each hour worked. For those aged 21 and over, that's £12.71 per hour in 2026/27. For 18–20 year olds it's £10.85, and for 16–17 year olds and apprentices it's £8.00.

What you actually keep from overtime depends on your marginal tax rate. If you're a basic-rate taxpayer, you pay 20% Income Tax and 8% National Insurance on extra earnings, so you keep 72p per pound. Once your total pay exceeds £50,270, you pay 40% tax and 2% NI, keeping 58p. A student loan repayment takes another 9p. Overtime never leaves you worse off in pure tax terms, but it can affect means-tested benefits or childcare support.

Myth 3: Your hourly rate is your take-home pay

Your hourly rate is gross – before deductions. To find your net hourly pay, divide your annual take-home by the total hours you actually work (including overtime). For example, at £20 per hour on a 37.5-hour week, annual gross is £39,000. After 2026/27 Income Tax and National Insurance on the standard 1257L code, take-home is about £31,600 per year. That works out to roughly £16.21 per hour net – noticeably less than £20.

Pension contributions (auto-enrolment takes at least 5% of your pay) and salary sacrifice schemes (cycle to work, childcare vouchers) reduce your taxable pay but also lower your take-home. Always use a calculator that accounts for these factors. Our salary data page has benchmarks for common roles.

Myth 4: London weighting is just a bonus

London weighting is an additional allowance paid to employees working in or near London to offset higher living costs. It is not a bonus – it's part of your contractual pay. For example, NHS pay scales include a London weighting of 5% to 20% depending on the zone. Teachers in inner London receive a higher allowance than those in outer London. When comparing hourly rates, check whether the figure includes London weighting. A £20 per hour job in central London may actually be £17 per hour plus £3 weighting.

Myth 5: Holiday pay is always separate

For regular-hours workers, employers cannot legally roll holiday pay into your hourly rate. They must pay it when you take leave. But for irregular-hours and part-year workers, holiday accrues based on hours worked. Since April 2024, holiday pay for these workers can be calculated using a 12.07% uplift on hours worked, or rolled up into the hourly rate. If you see a rate that seems unusually high, ask whether holiday pay is included. Our topics section covers this in more detail.

Myth 6: The median salary tells you what most people earn

The ONS Annual Survey of Hours and Earnings (ASHE) for 2025 reports median full-time gross annual earnings of £39,039. That's the middle point – half earn more, half earn less. But medians hide huge variation by region, occupation, and age. For example, median hourly pay for full-time employees was £19.67 in April 2025. Compare that to the National Living Wage of £12.71 in 2026/27 – many workers earn well below the median. Always benchmark against your specific sector.

How to get an accurate take-home pay figure

Start with your hourly rate and contracted hours. Multiply by 52 weeks for annual gross. Then deduct:

• Income Tax: 20% on earnings above £12,570 up to £50,270, then 40% above that.
• National Insurance: 8% on earnings between £12,570 and £50,270 (Class 1 employee rate), then 2% above.
• Pension: at least 5% if auto-enrolled (employer pays 3% minimum).
• Student loan: 9% on earnings above the repayment threshold (Plan 2: £27,295; Plan 5: £25,000).

Use our Hourly to Salary converter to see the breakdown. Remember that actual pay depends on your rota, overtime, and any salary sacrifice arrangements.

Final thoughts

Understanding what's my take home pay means looking beyond the headline hourly rate. Overtime rules, holiday pay structures, and tax bands all affect your net income. Always read your contract carefully and use official tools like the GOV.UK tax calculator or our own hourly calculator for personalised estimates. Don't rely on myths – get the facts.