How to calculate a pay rise percentage
A pay rise can be awarded as an annual percentage increase or as a fixed cash amount. When an employer offers a percentage increase, multiply your current gross pay by the percentage (divided by 100) to find your total increase.
For example, a 5% raise on a £50,000 annual salary provides an additional £2,500 per year (£50,000 multiplied by 0.05), bringing your new gross salary to £52,500.
If you are offered a cash raise, you can calculate the percentage increase by dividing the raise amount by your starting salary and multiplying by 100. For instance, a £3,000 raise on a £40,000 salary represents a 7.5% pay increase.
Worked example: 5% raise on a 50,000 salary
Consider an employee earning an annual salary of £50,000 working standard full-time hours (40 hours per week across 52 weeks per year) who receives a 5% merit increase.
The annual raise equals £2,500.00 (£50,000 multiplied by 5%), lifting annual gross pay to £52,500.00.
Broken down across payment schedules, monthly pay increases by £208.33 (from £4,166.67 to £4,375.00), weekly pay rises by £48.08 (from £961.54 to £1,009.62), and the equivalent hourly wage increases by £1.20 (from £24.04 to £25.24).
Converting hourly pay increases to annual salary
Hourly workers often receive pay increases quoted in pence or cents per hour, such as a £1.00 or $1.50 per hour raise. To understand the annual impact, multiply the hourly increase by your weekly contracted hours and total working weeks per year.
For a full-time employee working 40 hours per week for 52 weeks (2,080 working hours per year), a £1.50 per hour wage increase delivers an additional £3,120 per year before taxes.
Inputs for the Raise pay calculator
Current pay amount
Your existing gross pay before receiving the raise.
Pay frequency
The payment period corresponding to your current earnings, such as annual salary, monthly salary, weekly wage, or hourly rate.
Raise calculation type
Choose whether your raise is calculated as a percentage increase or a fixed monetary sum.
Raise percentage
The percentage by which your existing pay is increased.
Fixed raise amount
The flat cash sum added to your pay for each pay period.
Working hours per week
Your contracted normal working hours per week, used to convert between hourly and annual pay.
Working weeks per year
The number of paid weeks in your working year, typically 52 weeks for permanent staff.
CALCULATOR QUESTIONS
Pay rise calculator questions
How do I calculate what percentage my raise is?
Subtract your old pay from your new pay to find the increase amount. Divide that increase by your old pay, then multiply by 100 to get your percentage raise.
How does an hourly pay raise affect my annual earnings?
Multiply the hourly increase by the number of hours you work each week, then multiply by 52 (or your total working weeks per year) to calculate the full annual increase.
Does a salary raise push all my income into a higher tax bracket?
No. In progressive tax systems like the UK and US, tax brackets are marginal. Only the portion of your income that exceeds a tax band threshold is taxed at the higher rate, not your entire salary.
What is the difference between a merit raise and a cost of living adjustment?
A merit raise reflects personal performance and increased responsibilities, while a cost-of-living adjustment (COLA) is an organisation-wide increase designed to maintain purchasing power against inflation.