Tax terminology
UK tax terminology: a plain-English glossary
Gross, net, taxable pay, marginal rate, effective rate and other terms used in the calculators.
Last reviewed 22 August 2026
Money terms
These are the terms our results screens use.
- Gross pay — what you earn before any deduction.
- Taxable pay — gross pay less deductions taken before tax, such as a net pay pension contribution.
- Net pay or take-home pay — what reaches your bank account after all deductions.
- Personal allowance — the slice of income taxed at 0%, reduced above £100,000.
Rate terms
Two rates get confused more than any others.
- Marginal rate — the rate applied to your next pound of income.
- Effective rate — total tax divided by total income, always lower than your marginal rate once bands are involved.
- Threshold — the income level at which a rate or a repayment starts.
- Band — a range of income taxed at one rate.
Process terms
Terms you will meet in payroll and self-assessment.
- PAYE — the deduction-at-source system for employees.
- Self-assessment — the annual return used to report income outside PAYE.
- Payment on account — an advance payment towards next year's self-assessment bill.
- Real Time Information — the reporting employers send HMRC on each payday.
Calculators for this topic
This guide explains how the rules generally work. It is not tax advice, and your own position depends on your full circumstances — you may wish to seek professional advice.