Compare marginal rate to effective average rate.

A taxpayer earning 60,000 with 14,000 of tax paid has a 23.3% effective average rate. If their marginal rate is 40%, the next 1,000 of income is taxed at 40% — not 23.3%. Confusing the two leads to bad decisions on whether to take overtime, salary-sacrifice into pension, or accept a bonus.

What the result means

Effective average is total tax over total income. Marginal is the rate on the next pound. The gap is the marginal minus the average and shows how much more painful additional income is than the average suggests.

Use the marginal rate when deciding whether to take an extra job, accept a bonus, or contribute more to a pension. Use the average rate when assessing affordability or comparing year-on-year totals.

Run it with sensible defaults

Using gross annual income of 60,000, total tax paid of 14,000, marginal rate of 40%, the calculation works out to 23.33%. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Gross Annual Income, Total Tax Paid, and Marginal Rate — do not pull with equal force. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.

How the math works

Average rate is total tax divided by gross income. Gap is the difference between the supplied marginal rate and the calculated average. Both are expressed as percentages. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

Using this in pay negotiations

Knowing the exact figure behind a headline rate gives you specific numbers to anchor to in conversations about pay. "The difference is £X per month after tax" lands harder than "a couple of grand a year". Concrete numbers move decisions.

What this doesn't capture

Tax bands, pension contributions, student-loan deductions, and benefits-in-kind sit outside this calculation. The figure is the headline; your actual position depends on local tax rules and personal circumstances. Pair with a dedicated take-home calculator for the full picture.