To find your pay rise as a percentage, divide the increase by your old pay and multiply by 100: a rise from £25,000 to £26,000 is £1,000 on £25,000, which is 4%. That one number is what you need to judge a pay offer.
The second step is to compare it with inflation. A 4% rise when prices are up 3.1% leaves you about 0.9% better off; the same rise with prices up 5% leaves you worse off. This guide shows both calculations in your head, with the latest official inflation figure and this year's minimum wage rates as worked examples.
How to calculate a pay rise as a percentage
The formula has two steps. First, the increase: new pay minus old pay. Then divide that increase by the old pay and multiply by 100. Always divide by the old figure, because the rise is measured from where you started.
- £28,000 to £29,120: the increase is £1,120, and 1,120 ÷ 28,000 = 0.04, so 4%.
- £2,400 to £2,520 a month: the increase is £120, and 120 ÷ 2,400 = 0.05, so 5%.
- £15.00 to £15.45 an hour: the increase is 45p, and 0.45 ÷ 15 = 0.03, so 3%.
In your head, the trick is to find 1% first. 1% of £28,000 is £280, so a rise of £1,120 is four lots of £280, that is 4%. 1% of £2,400 is £24, and £120 is five of those. The same anchors work for any percentage, as our guide to percentages in your head explains step by step.
The calculation also works backwards. If you are offered a 3% rise on £27,500, the new salary is £27,500 × 1.03: 1% is £275, so 3% is £825 and the new figure is £28,325. Multiplying by 1.03 directly gives the same answer in one step.
Pay rise vs inflation: what CPI tells you
Inflation measures how much prices have risen. In the UK, the headline figure is the Consumer Prices Index, published every month by the Office for National Statistics. According to the ONS bulletin for August 2026, CPI rose by 3.1% in the 12 months to August 2026, up from 2.9% in July. CPIH, which also includes owner occupiers' housing costs, rose by 3.3%.
If your pay rose by more than that, it buys more than it did a year ago: a rise in real terms. If it rose by less, you can buy less with it, even though the number on your payslip went up. The figure changes every month, so check the latest ONS release before a pay review; the next one is due on 21 October 2026.
Real terms pay rise, calculated exactly
The quick estimate is to subtract: a 4% rise with 3.1% inflation is roughly 0.9% in real terms. It works well while both numbers are small. The exact version divides instead: 1.04 ÷ 1.031 = 1.0087, a real rise of 0.87%.
The table below shows what different rises are worth against 3.1% inflation. A rise has to be above 3.1% just to stand still.
| Pay rise | Real change with 3.1% inflation | What it means |
|---|---|---|
| 2% | −1.1% | Your pay buys less than a year ago |
| 3% | −0.1% | Almost level, slightly behind |
| 3.1% | 0% | Level with prices |
| 4% | +0.9% | A small real rise |
| 5% | +1.8% | A clear real rise |
| 6% | +2.8% | A strong real rise |
Your own inflation can differ from the average. In August 2026 the ONS named transport, and motor fuels in particular, as the largest driver of the rate, while food and non-alcoholic drinks rose by only 1.3%. Someone who drives a lot felt prices rise faster than someone who does not.
The National Living Wage in 2026 as a worked example
The minimum wage rates make a good example, because they are published, fixed and easy to check. On the GOV.UK page for the National Minimum Wage and National Living Wage, the rate for workers aged 21 and over is £12.71 an hour from April 2026, against £12.21 the year before. The rates change on 1 April every year.
| Age group | April 2025 | April 2026 | Rise |
|---|---|---|---|
| 21 and over | £12.21 | £12.71 | 4.1% |
| 18 to 20 | £10.00 | £10.85 | 8.5% |
| Under 18 | £7.55 | £8.00 | 6.0% |
| Apprentice | £7.55 | £8.00 | 6.0% |
Take the rate for 21 and over: 50p on £12.21. 1% of £12.21 is about 12p, and 50p is a little over four of those, so just over 4%. The exact figure is 4.1%, ahead of CPI at 3.1% in August 2026, although the two figures cover different twelve-month periods. For a full-time week of 37.5 hours, 50p an hour adds £18.75 a week, or £975 over 52 weeks; for 20 hours a week, it adds £10 a week.
The largest rise in the table is for 18 to 20 year olds: 85p on £10.00, or 8.5%, more than twice the rate of CPI inflation in August 2026. On £10, finding the percentage is the easiest case of all, since each 10p is exactly 1%.
CPI inflation rate or CPIH, and which one to use
CPI is the headline rate in the ONS bulletin and the simplest reference for a pay comparison. CPIH also includes owner occupiers' housing costs and was a little higher in August 2026, at 3.3% against 3.1%. Whichever you choose, compare like with like: the same index, over a period as close as possible to the one your pay rise covers.
Watch the difference between percent and percentage points. If inflation goes from 3.1% to 2.9%, it has fallen by 0.2 percentage points, which is about a 6.5% fall in the rate itself, since 0.2 ÷ 3.1 is roughly 0.065. Pay statements and news reports mix the two, and the gap between them can look dramatic.
For a rise that took effect in April, the honest comparison is with inflation over the year to April. For a quick check during the year, the latest annual rate is a fair stand-in, as long as you remember that it moves from month to month.
Check a pay offer in your head
Before a pay review, prepare three numbers: your current pay, the offer and the latest CPI rate. Work out the rise with the 1% anchor, compare it with inflation, and you know within a minute whether the offer keeps up with prices. For monthly figures, divide an annual salary by 12, which the 12 times table makes quick: £30,000 a year is £2,500 a month.
Over several years, small gaps add up, because each year's rise applies to the new figure. Three years of 2% rises while prices go up 3% a year leave real pay about 2.9% lower: 1.02 × 1.02 × 1.02 = 1.0612, against 1.03 × 1.03 × 1.03 = 1.0927, and 1.0612 ÷ 1.0927 is about 0.971.
The same method works for anything that rises: rent, a subscription, a train fare. Divide the increase by the old price, then compare with inflation. Kalc trains this kind of percentage calculation in short daily sessions, with an adult mode built on everyday examples. If percentages still feel slow, start with the 10 times table, since every percentage begins with dividing by 10 or by 100.
Frequently asked questions
How do you calculate a pay rise percentage?
Subtract the old pay from the new pay, divide by the old pay and multiply by 100. From £25,000 to £26,000, that is 1,000 ÷ 25,000 = 4%.
What is a real terms pay rise?
A rise bigger than inflation, so your pay buys more than before. With CPI at 3.1% in August 2026, a 4% rise is about 0.9% in real terms.
Is a 4 percent pay rise above inflation in 2026?
Yes, against CPI inflation of 3.1% in the 12 months to August 2026, published by the ONS on 16 September 2026. Check the latest release, because the rate changes every month.
What is the National Living Wage from April 2026?
£12.71 an hour for workers aged 21 and over, up from £12.21, a rise of 4.1%. The rate for 18 to 20 year olds is £10.85.
Which inflation rate should you compare a pay rise with?
CPI, the headline rate published by the ONS, is the simplest reference. CPIH, which includes owner occupiers' housing costs, was a little higher at 3.3% in August 2026.
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