How to compare two job offers properly

Compare take-home pay, not the headline salary

The fair way to compare two job offers is to put each salary through tax, National Insurance or FICA, and your own pension contribution, then compare the money that reaches your bank account. A £4,000 gap in headline salary is never a £4,000 gap in your pocket.

In the UK for 2026/27, Income Tax is 20% on taxable income from £12,571 to £50,270 and 40% above that, and employee National Insurance is 8% on earnings between £12,570 and £50,270 and 2% above, according to GOV.UK. A basic rate taxpayer with a workplace pension under the net pay method therefore keeps about 68p of each extra £1 of salary after a 5% pension contribution, and a higher rate taxpayer keeps much less. The pay rise calculator shows exactly how much of a salary difference you keep at your income.

In the US, the gap shrinks through federal income tax, 7.65% FICA (Social Security and Medicare) and any state income tax. Moving from $85,000 to $92,000 in Texas, which has no state income tax, adds $4,597 a year to take-home pay for a single filer paying 6% into a 401(k), not $7,000. The same move in a state with income tax adds less.

Put both offers into the job offer comparison tool with the same tax settings (Scottish or not, student loan plan, US state and filing status) so the only differences are the ones the employers control.

Employer pension and 401(k) match is part of your pay

An employer pension contribution is money paid for you on top of salary, so a lower salary with a better pension can be worth more than a higher salary with the minimum. Two offers that look £4,000 apart can be much closer once you add it back.

According to GOV.UK, the legal minimum under automatic enrolment is 8% of qualifying earnings, of which the employer must pay at least 3%. Qualifying earnings in most schemes are pay between £6,240 and £50,270 a year, so 3% of qualifying earnings on a £46,000 salary is less than 3% of the whole salary. Ask each employer two questions: what percentage they pay, and whether it is a percentage of full salary or of qualifying earnings.

UK employer pension contributions are not taxed as your income. The Income Tax (Earnings and Pensions) Act 2003, section 308, says no Income Tax arises when an employer contributes to a registered pension scheme for an employee, and employers pay no National Insurance on them either. Some employers match more if you pay more: a scheme that pays 8% when you pay 5% is common in larger firms.

In the US, the IRS describes employer matching contributions as money that grows tax-free in the plan and is taxable only when withdrawn. The IRS gives the example of a 50% match on contributions up to 5% of salary: on $30,000, that match is capped at $750 a year. Check the vesting schedule too. Employer 401(k) money may belong to you only after a number of years, so a match you would lose by leaving in year two is worth less to you. The 2026 limit on your own 401(k) deferrals is $24,500, according to the IRS.

Commute time and cost can wipe out a pay gap

A longer or more frequent commute costs you both money and unpaid hours, and it can cancel a salary gap of several thousand pounds or dollars. Count office days, not a five-day week, if one of the jobs is hybrid.

Work out the yearly figures before comparing. Take the office days a week, multiply by the weeks you actually work (52 weeks less paid holiday), then multiply by the return fare or fuel and parking cost. For time, multiply the same office days by the door-to-door journey both ways.

• Two office days a week, 45.4 working weeks and a £9 return fare comes to about 91 office days, £817 and 91 hours a year.
• Five office days a week, 46.4 working weeks and a £22 return fare comes to 232 office days, £5,104 and 464 hours a year at one hour each way.

The second commute costs £4,287 more and takes 373 more hours: more than nine extra 40-hour weeks of your time. According to GOV.UK, employees cannot claim tax relief for travelling to and from work unless it is a temporary workplace, so all of it comes out of taxed pay. The job offer tool can also work out a driving commute from distance, fuel economy and the fuel price if you drive rather than take a train or bus.

A useful single number is take-home pay per hour including the commute: yearly take-home divided by hours worked plus hours travelling. It lets you compare a well-paid job with a long commute against a lower-paid job close to home.

Paid holiday changes the real hourly rate

More paid days off means you earn the same salary for fewer hours, so an offer with 33 days of holiday is worth more per hour than one with 28 days at the same pay. Always ask whether the figure includes bank holidays.

According to GOV.UK, almost all UK workers are entitled to 5.6 weeks' paid holiday a year, which is 28 days for a five-day week, and an employer can include bank holidays in that. England and Wales have 8 bank holidays in 2026, according to GOV.UK, so an offer of "25 days plus bank holidays" is 33 days in total, while "28 days including bank holidays" is the legal minimum. Part-time workers get 5.6 times the days they work each week: 16.8 days for a three-day week.

In the US, there is no federal right to paid vacation. According to the US Department of Labor, the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave or federal holidays; they are a matter of agreement between employer and employee. That makes the PTO figure in a US offer something to compare and, often, to negotiate.

Five extra days a year is 37.5 fewer hours on a 37.5-hour week. At a £50,000 salary spread over 260 paid days, one day is worth about £192 before tax, so five days are worth about £960 of salary.

Taxable benefits: private medical insurance and the P11D

A UK benefit in kind such as private medical insurance is not free: you pay Income Tax on its cost at your own rate, usually through your tax code. Count a benefit at its value to you, less that tax.

According to GOV.UK, you usually pay tax on the cost of the insurance premiums if your employer pays for your medical insurance. When the employer arranges and pays the insurer directly, it reports the benefit on form P11D and pays Class 1A National Insurance on its value, which is the cost to the employer of providing the insurance. The Class 1A rate for 2026/27 is 15%, paid by the employer, and you pay no employee National Insurance on the benefit.

A £1,200 policy therefore costs a basic rate taxpayer £240 a year in extra Income Tax and a higher rate taxpayer £480. If you would not buy the cover yourself, value it well below £1,200. Some health benefits are tax-free, including one health screening or medical check a year and medical insurance while working abroad for the employer, according to GOV.UK.

US benefits work differently. According to IRS Publication 15-B (2026), any fringe benefit is taxable unless the law excludes it, but employer-paid accident and health benefits (health insurance) are excluded, so $6,000 of employer health premiums is worth the full $6,000 in a comparison. Compare the employee premium and deductible too, since these come out of your pay.

Worked UK example: £46,000 hybrid against £50,000 in the office

The £46,000 offer is worth £2,786 a year more than the £50,000 offer once pension, commute and holiday are counted, even though its take-home pay is £2,480 lower. These are the figures from the job offer comparison tool for 2026/27 in England, with no student loan.

Inputs: Offer A is £46,000, 37.5 hours over 5 days, 5% employee and 8% employer pension (net pay), 33 days' holiday, 2 office days a week, 30 minutes each way and £9 a day. Offer B is £50,000, 37.5 hours, 5% employee and 3% employer pension, 28 days' holiday, 5 office days, 60 minutes each way, £22 a day, and private medical insurance worth £1,200 on a P11D.

Offer B pays more in cash but loses £2,180 of employer pension and costs £4,287 more to reach. Per hour of your time, including travel, Offer A pays £2.50 more. If you value the medical insurance at nothing, the gap widens by another £1,200.

Worked US example: $85,000 with a match against $92,000 without

The $85,000 offer comes out $2,787 a year ahead of the $92,000 offer after the 401(k) match, health cover and commute. Both figures are for a single filer in Texas in 2026, paying 6% of salary into a 401(k).

Inputs: Offer A is $85,000, 40 hours over 5 days, a 4% employer match, $6,000 of employer health premiums, 25 days of PTO, 3 office days, 25 minutes each way and $12 a day. Offer B is $92,000, no match, $4,000 of health premiums, 15 days of PTO, 5 office days, 45 minutes each way and $15 a day.

Offer B's extra $4,597 of take-home pay is more than cancelled by the $3,400 match, $2,000 less health cover and $1,983 of extra commuting. It also asks for 80 more working hours and 250 more hours of travel a year.

What the numbers leave out, and how to use them

A comparison of take-home pay, pension, commute and holiday settles the money question, but a few items need judgement or extra checks before you accept.

• Bonus: count only the part that is guaranteed or reliably paid, and remember it is taxed as pay.
• Signing bonus: a one-off amount, taxed in the year you receive it, and some contracts claw it back if you leave within a year.
• Salary sacrifice: if an employer runs pension salary sacrifice, you also save National Insurance on your contribution. According to GOV.UK, from April 2029 only the first £2,000 a year of employee contributions through salary sacrifice will be free of National Insurance.
• Notice period: a three-month notice period in the new contract limits your next move.
• Equity, pay reviews and progression: real, but uncertain, so compare them separately from the fixed numbers.

Use the result to negotiate. If the offer you prefer is £2,000 behind on value, ask for the gap as salary, a higher pension contribution, extra holiday or an extra home-working day, then run the numbers again with the job offer comparison tool.