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Reference · Worked Examples

UK worked examples library

Forty fully-worked UK tax and pension calculations for 2026/27. Each example shows the scenario, the step-by-step calculation, and the result — so you can verify our calculators yourself or apply the maths to your own situation. Organised by topic; use the navigation to jump to the relevant section.

12-minute read

This is the reference library for every calculation methodology used across UK Tax Drag's calculators. Each worked example uses 2026/27 tax-year figures (Personal Allowance £12,570, basic rate 20% to £50,270, higher rate 40% to £125,140, additional rate 45%, NI Class 1 employee 8% on £12,570–£50,270 + 2% above, CGT £3,000 allowance + 18%/24% rates, Dividend Allowance £500, etc.). Click any link below to jump to a topic.

  1. Take-home pay (3 examples)
  2. Salary sacrifice (3)
  3. HICBC clawback (3)
  4. 60% trap escape (2)
  5. CGT on shares (3)
  6. CGT on property (2)
  7. SDLT (3)
  8. Pension annual allowance (2)
  9. Carry-forward + taper (2)
  10. ISA strategy (2)
  11. State pension top-up (2)
  12. NI calculations (2)
  13. Marriage Allowance (2)
  14. Plan 5 student loans (2)
  15. Tax codes (2)
  16. Gilt yield + return (2)
  17. CETV illustrative (1)
  18. VAT calculation (1)
  19. Crypto CGT (1)

Take-home pay (3 worked examples)

Example 1 — £35,000 salary, England, no pension

Inputs: Gross £35,000 · Tax code 1257L · No pension contributions · No other income · No student loan

Personal Allowance applied£12,570
Taxable income: £35,000 − £12,570£22,430
Income tax: 20% × £22,430£4,486
NI: 8% × (£35,000 − £12,570) = 8% × £22,430£1,794.40 → £1,795
Total deductions: £4,486 + £1,795£6,281
Take-home: £35,000 − £6,281£28,719
Monthly: £28,719 / 12£2,393
Effective rate17.9%

Example 2 — £65,000 salary, England, 5% employee pension

Inputs: Gross £65,000 · 5% salary sacrifice pension (£3,250) · Tax code 1257L · Adjusted net income £61,750

Pensionable salary: £65,000 − £3,250£61,750
Taxable income: £61,750 − £12,570£49,180
Basic rate: 20% × £37,700£7,540
Higher rate: 40% × (£49,180 − £37,700) = 40% × £11,480£4,592
Total IT£12,132
NI: 8% × (£50,270 − £12,570) + 2% × (£61,750 − £50,270) = £3,016 + £229.60£3,246
Total deductions: £12,132 + £3,246£15,378
Take-home: £61,750 − £15,378£46,372
Plus £3,250 going into pension (tax-deferred)

Example 3 — £125,140 salary, England (top of 60% trap)

Inputs: Gross £125,140 · PA fully tapered to £0 · No pension contributions

PA at £125,140 (fully tapered)£0
Taxable income£125,140
Basic rate (20% on £37,700)£7,540
Higher rate (40% on £125,140 − £37,700 = £87,440)£34,976
Total IT£42,516
NI: £3,016 + 2% × (£125,140 − £50,270) = £3,016 + £1,497.40£4,513
Take-home: £125,140 − £42,516 − £4,513£78,111
Effective tax + NI rate37.6%

Salary sacrifice (3 worked examples)

Example 4 — Basic-rate taxpayer £30,000 sacrificing £100/month

Annual sacrifice£1,200
Income tax saved (20% × £1,200)£240
NI saved (8% × £1,200)£96
Total relief£336
Net cost of £1,200 in pension£864 (relief: 28%)

Example 5 — Higher-rate taxpayer £80,000 sacrificing £500/month

Annual sacrifice£6,000
Income tax saved (40% × £6,000)£2,400
NI saved (2% × £6,000)£120
Total relief£2,520
Net cost of £6,000 in pension£3,480 (relief: 42%)

Example 6 — £110k earner sacrificing £10,000 to escape 60% trap

Pre-sacrifice: ANI £110,000 → PA tapered to £7,570. Post-sacrifice: ANI £100,000 → PA fully restored at £12,570.

Sacrifice£10,000
Income tax saved (40% × £10,000)£4,000
NI saved (2% × £10,000)£200
Restored PA: £12,570 − £7,570 = £5,000 of income now taxed at 0% instead of 40% (20% relief on £5,000)£2,000 saved
Total relief£6,200
Net cost of £10,000 in pension£3,800 (effective 62% relief)

HICBC clawback (3 worked examples)

Example 7 — £68k earner with 2 children

Adjusted net income£68,000
Excess over £60,000£8,000
Clawback rate: 1% per £200 of excess = £8,000 / £200 × 1%40%
Child Benefit (2 children, 2026/27 figures)£2,213
HICBC owed: £2,213 × 40%£885

Example 8 — £75k earner with 3 children — partial clawback

ANI£75,000
Excess over £60,000£15,000
Clawback: £15,000 / £200 × 1%75%
Child Benefit (3 children, 2026/27)£3,110
HICBC owed: £3,110 × 75%£2,333

Example 9 — £82k earner — full clawback

ANI£82,000
Excess over £60,000£22,000 → capped at £20,000 (full clawback)
Clawback rate100%
Child Benefit (2 children)£2,213
HICBC owed (full)£2,213

60% trap escape (2 worked examples)

Example 10 — £120k earner, escape via £20k pension sacrifice

Pre-sacrifice ANI£120,000
PA tapered: £12,570 − (£120,000 − £100,000)/2 = £12,570 − £10,000£2,570
Sacrifice into pension£20,000
Post-sacrifice ANI: £100,000
PA restored to full£12,570
Income tax saved: 40% × £20,000 + restored PA effect£8,000 + £4,000 = £12,000
NI saved: 2% × £20,000£400
Total relief£12,400
Net cost: £20,000 − £12,400£7,600 (62% relief)

Example 11 — £105k earner, partial escape

Pre-sacrifice ANI£105,000
PA tapered£10,070
Sacrifice £5,000
Post-sacrifice ANI: £100,000 → PA fully restored£12,570
Income tax saved (40% on £5,000)£2,000
PA-restoration tax saved (£2,500 of PA restored × 40%)£1,000
NI saved (2% × £5,000)£100
Total relief£3,100
Net cost: £5,000 − £3,100£1,900 (62% relief)

CGT on shares (3 worked examples)

Example 12 — Higher-rate taxpayer with £8k gain on shares (GIA)

Total gain on shares sold£8,000
Less annual CGT allowance (2026/27)£3,000
Taxable gain£5,000
CGT rate (higher rate, non-property)24%
CGT bill£1,200

Example 13 — Section 104 pooling on multiple lot purchases

Inputs: Bought 100 shares of XYZ at £20 (March 2024); 200 shares at £30 (October 2024); sold 150 shares at £40 (March 2026).

Section 104 pool: 300 shares cost £20×100 + £30×200 = £2,000 + £6,000£8,000 total cost
Average cost per share£26.67
Cost of 150 sold shares: 150 × £26.67£4,000
Proceeds: 150 × £40£6,000
Gain on sale£2,000
Below £3,000 allowance£0 CGT
Remaining pool: 150 shares × £26.67£4,000 cost basis

Example 14 — Basic-rate taxpayer with £15k gain

Total gain£15,000
Less CGT allowance£3,000
Taxable gain£12,000
Salary £35,000 (already at basic rate). Taxable income excess into higher rate? No — £35k + £12k = £47k still in basic-rate band for gain.
CGT at 18% basic rate (non-property)
CGT bill: 18% × £12,000£2,160

CGT on property (2 worked examples)

Example 15 — BTL property sold for £50k gain (higher-rate taxpayer)

Sale price£280,000
Less original cost + improvements£220,000
Less acquisition + disposal costs (legal, agent fees)£10,000
Gain£50,000
Less CGT allowance£3,000
Taxable gain£47,000
CGT rate (residential property, higher rate)24%
CGT bill£11,280
Must report + pay within 60 days of completion

Example 16 — Inherited property sold (base cost reset)

Inherited property in 2024. Probate value (base cost reset)£300,000
Sold in 2026£330,000
Less disposal costs£5,000
Gain (only since inheritance, not from deceased's original cost)£25,000
Less CGT allowance£3,000
Taxable gain£22,000
CGT at 24%£5,280

SDLT (3 worked examples, England 2026/27)

Example 17 — First-time buyer, £400k home (no additional residence)

Price: £400,000. First-time buyer relief applies up to £625k.
0% on first £425,000£0
SDLT£0

Example 18 — Standard buyer, £550k home (no FTB relief)

0% on first £250,000£0
5% on £250,001–£550,000 = £300,000 × 5%£15,000
SDLT£15,000

Example 19 — Buy-to-let, £400k (3% additional dwelling surcharge)

Standard SDLT: 0% × £250k + 5% × £150k£7,500
3% additional rate on full £400,000£12,000
Total SDLT£19,500

Pension annual allowance (2 worked examples)

Example 20 — Standard AA usage

2026/27 annual allowance (no taper)£60,000
Employee pension contribution (salary sacrifice)£20,000
Employer contribution£15,000
Total pension input£35,000
Remaining AA£25,000
Headroom for additional pension contribution£25,000

Example 21 — Tapered AA (high earner)

Adjusted income£310,000
Threshold income£260,000+ (assume threshold also met)
Tapering: £1 reduction in AA per £2 of adjusted income above £260,000
Reduction: (£310,000 − £260,000) / 2£25,000
Tapered AA: £60,000 − £25,000£35,000
AA available this year£35,000

Carry-forward + tapered AA stack (2 worked examples)

Example 22 — Standard carry-forward usage

Inputs: 2026/27 AA: £60,000. Unused 2023/24 AA: £10k. Unused 2024/25 AA: £20k. Unused 2025/26 AA: £30k.

Current-year AA (2026/27)£60,000
Plus carry-forward from 2023/24£10,000
Plus carry-forward from 2024/25£20,000
Plus carry-forward from 2025/26£30,000
Total available for 2026/27£120,000
Must also be within "100% of relevant earnings" rule

Example 23 — Carry-forward × taper interaction

Inputs: 2026/27 adjusted income £350k → AA tapered to £15k. Unused prior 3 years total £40k (no taper applied in those years).

2026/27 tapered AA£15,000
Plus carry-forward from 3 prior years£40,000
Total available for 2026/27£55,000

ISA strategy (2 worked examples)

Example 24 — LISA penalty calculation (25-year-old early withdrawal)

Personal contributions over 4 years£16,000
Government bonus (25% × £16,000)£4,000
Total LISA pot at age 25£20,000
Early withdrawal (not first home / not retirement / not terminal illness)
Penalty: 25% × £20,000£5,000
Net withdrawal received£15,000
Effective loss vs personal contributions£1,000 loss

Example 25 — Junior ISA growth to age 18

Inputs: £200/month from age 0 to 18. 7% annual return.

Total contributions over 18 years£43,200
Final value at 7% annual compound~£89,000
Tax-free at child's 18th birthdayTax-free

State pension top-up (2 worked examples)

Example 26 — Voluntary Class 3 NI worth it?

Annual cost of Class 3 NI (2026/27)£956.80
Adds to State Pension: 1/35 × £241.30/week × 52£342/year
Payback period (£959.40 / £342)~2.8 years post-State-Pension
20-year retirement payback~£6,840 lifetime increase vs £959 outlay

Example 27 — Class 2 NI buyback (cheaper option for self-employed)

Class 2 NI weekly rate (when applicable)£3.65
Annual cost£179.40
Same State Pension addition: 1/35 of full new SP£342/year
Payback period~0.5 years (6 months)

NI calculations (2 worked examples)

Example 28 — Employee Class 1 NI at £42k

Salary£42,000
NI: 8% × (£42,000 − £12,570) = 8% × £29,430£2,354.40

Example 29 — Self-employed Class 4 NI at £45k profit

Profit (taxable trading profit)£45,000
Class 4 NI: 6% × (£45,000 − £12,570)£1,945.80
Class 2 NI: now £0 (abolished from April 2024)£0
Total NI£1,946

Marriage Allowance (2 worked examples)

Example 30 — Standard claim (£10k income spouse + £30k spouse)

Lower-income spouse: PA £12,570 used by £10k → £2,570 spare
Transfer £1,260 to higher-income spouse
Higher-income spouse PA effective: £12,570 + £1,260 = £13,830
Tax saving: 20% × £1,260£252
Annual saving for the couple£252

Example 31 — Retrospective 4-year claim

Same situation, claim back to 2022/23 tax year
Saving per year£252
Years claimable retrospectively (2022/23, 2023/24, 2024/25, 2025/26)4 years
Backdated lump sum repayable£1,008

Plan 5 student loans (2 worked examples)

Example 32 — Plan 5 repayment at £35k salary

Salary£35,000
Plan 5 threshold£25,000
Amount above threshold£10,000
Repayment: 9% × £10,000£900/year
Monthly£75

Example 33 — Plan 5 repayment at £55k salary

Salary£55,000
Above threshold£30,000
Repayment: 9% × £30,000£2,700/year
Monthly£225

Tax codes (2 worked examples)

Example 34 — Standard 1257L vs BR comparison on £30k

CodeTax on £30k
1257L (correct)20% × (£30k − £12,570) = £3,486
BR (incorrect — second job behaviour)20% × £30k = £6,000
Annual over-deduction on BR£2,514

Example 35 — K-prefix code with £2,000 deduction (e.g. BIK)

Code: K200 → PA reduced by £2,000£2,000 deduction
Effective PA: £12,570 − £2,000£10,570
Salary £30,000
Tax: 20% × (£30,000 − £10,570)£3,886
vs 1257L: £3,486
Extra tax due to K200 code£400

Gilt yield + return (2 worked examples)

Example 36 — Low-coupon gilt to maturity (CGT-exempt)

Inputs: TG27 (Treasury 0.25% 2027), bought at £93.50 in May 2026, matures Jan 2027 (~8 months).

Purchase: £93.50 per £100 nominal × 10 (i.e. £1,000 nominal)£935
Coupons received until maturity (Jan 2027)£1.25
Coupon tax: 40% (higher rate, above PSA): −£0.50−£0.50
Net coupon retained£0.75
Maturity proceeds (par): £1,000 × £100/£100£1,000
Capital gain (£1,000 − £935): £65 (CGT-EXEMPT for gilts)£65 tax-free
Total return on £935 over 8 months£65.75 (~7.05%)
Annualised return~10.6% (annualised)

Example 37 — Higher-coupon gilt (more coupon, less capital gain)

Inputs: TN26 (Treasury 4% 2026), bought at £99.55, matures Mar 2026 (~10 months).

Purchase: £99.55 × 10 = £995.50£995.50
Annual coupon: 4% × £1,000 nominal£40
Coupon over 10 months: £40 × 10/12£33.33
Coupon tax at 40%: −£13.33−£13.33
Net coupon: £20.00
Maturity (par)£1,000
Capital gain: £4.50 (tax-exempt)£4.50
Total net return on £995.50~£24.50 (2.46%)

Note: for a higher-rate taxpayer, the low-coupon gilt example (£0.75 coupon vs £20 coupon) is much more tax-efficient — most return is the tax-free capital gain.

CETV illustrative (1 worked example)

Example 38 — CETV at age 55 for £20k/year DB pension

Accrued DB pension at retirement (65)£20,000/year
Indexation: CPI (assume 2.5% long-term)
Spousal benefit: 50%
CETV calculation at 1% gilt yield (~2020)~£800,000
CETV calculation at 4% gilt yield (~2024)~£420,000
Implied multiplier at 4%: £420k / £20k21×

For full DB transfer methodology, see CETV explained.

VAT calculation (1 worked example)

Example 39 — Standard vs Flat Rate Scheme for service business

Inputs: £80,000 turnover ex-VAT. Service business with minimal VAT inputs (£3,000 of allowable expenses).

Standard VAT:
Output VAT: 20% × £80,000£16,000
Input VAT reclaim: 20% × £3,000−£600
VAT paid to HMRC£15,400
Flat Rate Scheme (Limited Cost Trader at 16.5%):
VAT charged on £96k (inc VAT): 16.5% × £96,000£15,840
1% first-year discount: 15.5% × £96,000£14,880
Year 1 saving: £15,400 − £14,880£520

Crypto CGT (1 worked example)

Example 40 — Crypto disposal with section 104 pooling

Inputs: Bought 0.5 BTC at £20,000 (March 2023); 1 BTC at £30,000 (October 2024); sold 0.75 BTC at £45,000 each (March 2026).

Total BTC purchased: 1.5 BTC for £20k + £30k = £50,000 total cost
Section 104 average cost per BTC£33,333
Sold 0.75 BTC at £45,000 each: proceeds£33,750
Cost basis: 0.75 × £33,333£25,000
Gain: £33,750 − £25,000£8,750
Less CGT allowance£3,000
Taxable gain£5,750
CGT at 24% (higher rate)£1,380
Remaining pool: 0.75 BTC × £33,333£25,000 cost basis

How to use this library

Sources + methodology

All figures use HMRC published rates for 2026/27 tax year (Personal Allowance £12,570; basic rate band £37,700; higher rate to £125,140; additional rate above; CGT allowance £3,000; Dividend Allowance £500; etc.). Pension annual allowance £60,000 with taper above £260,000 adjusted income. Plan 5 student loan threshold £25,000, rate 9%. Child Benefit figures from 2026/27 published rates (£26.05/week for first child, £17.25 each additional). Each example links to the relevant deep-dive page. The site methodology documents review process.

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