Real Pay Rise Calculator

Find out if your pay rise is actually a pay cut. Our calculator compares your salary increase against UK inflation to show your real-terms gain or loss.

Inflation-Adjusted Pay Rise Calculator

Frequently Asked Questions

What is a real pay rise vs nominal pay rise?

A nominal pay rise is the headline percentage increase (e.g. 3%). A real pay rise is after subtracting inflation. If inflation is 3% and your pay rise is 3%, your real pay rise is 0% — you're not better off.

What is the current UK inflation rate?

In early 2026, UK CPI inflation is approximately 2.8–3.2%. The Bank of England targets 2%. Use the latest ONS CPI figure in our calculator for accurate results.

How do I calculate my real pay rise?

Real pay rise = ((1 + nominal rise) / (1 + inflation)) - 1. For example, a 4% pay rise with 3% inflation gives a real rise of about 0.97%.

Why has my pay kept falling in real terms since 2020?

UK workers experienced significant real pay cuts from 2021–2023 when inflation peaked at 11.1% while average pay rises were 5–7%. Real wages only started recovering in 2024.

What pay rise should I ask for to beat inflation?

To maintain purchasing power, your nominal pay rise should exceed CPI. To achieve a meaningful 2% real increase with 3% CPI, you'd need approximately a 5.06% nominal rise.

Does tax reduce the value of my pay rise?

Yes. A £1,500 gross pay rise for a basic-rate taxpayer (20% tax + 8% NI) delivers only £1,080 additional take-home pay. Higher-rate taxpayers receive even less.

What's the difference between CPI and RPI?

CPI (Consumer Prices Index) is the official inflation measure and tends to be lower. RPI includes mortgage interest payments and is typically 0.5–1.5% higher. Many pay negotiations reference RPI.

Is the Living Wage a real pay rise?

The National Living Wage increases are set annually above inflation. For 2026/27, the NLW rises to £12.21/hour (April 2026), which at 6.7% is a real-terms increase for minimum wage workers.

How does a pay rise affect my tax band?

A pay rise near the £50,270 higher-rate threshold means part of your rise may be taxed at 40% rather than 20%, significantly reducing take-home. Our calculator applies the marginal rate you select.

What about salary sacrifice impact on pay rises?

If you have salary sacrifice arrangements (pensions, cycle to work), your pre-sacrifice salary is used for some calculations. Check with your employer how pay rises affect your sacrifice amount.

What's a good pay rise in the UK?

A 'good' pay rise exceeds inflation. UK average pay growth in 2025/26 is around 3.8–4.2%. Any rise above 3% (current CPI) in 2026 represents a real increase in purchasing power.

Should I negotiate my pay rise?

Yes. Research market rates using tools like Glassdoor and LinkedIn Salary. Employees who negotiate receive on average 7–10% more than those who don't. Present evidence of your contribution and market value.