Working with Numbers

Standard Salary Calculator (Take Home Calculator)
The standard salary calculator allows you to input your gross salary after which the net salary will be shown, with deductions including National Insurance (NI), Student Loan, and Pension contributions taken into account. It breaks down the salary into annual, monthly, weekly and daily payments.

Hourly Pay Calculator (Hourly Wage Calculator)
This calculator allows you to put in your hourly wage then shows you what your net pay will be per year, month, day and week – particularly useful if you are working as a temporary member of staff for a recruitment agency, for example.
You can also alter the number of weekly hours that you are doing (the default number is 37.5).

Desired. sal calculator (Required Salary Calculator)
This calculator allows you to put a desired monthly salary. The calculator will then tell you what gross annual salary you would need to earn to get the desired/required monthly net salary.

Income tax rates and bands:

Income tax rates change at the beginning of each new tax year. The tax (or Financial Year) starts in April and ends in March of the following year in the UK.
There are a number of allowances, depending on age, among other factors, that apply before you have to pay any tax.

Rates:
£0 – £33,500 – 20% (basic tax rate)
£33,500 – £150,000 – 40% (higher tax rate)
Everything above £150,000 – 45% (top tax rate)

Bands

Basic personal allowance – £11,500 – this applies to everyone. If your earnings are less than this amount, you will not pay any tax. However, if you earn £100,000 or more, then you will not get the basic allowance.

Personal Allowance (for those 67 and over) – £ 11,500 –

Blind – those who are blind get an additional allowance of £2290, on top of the basic allowance of £11,500.

The various tax codes:
1150L – this is the basic tax code, which most people are on. The 115 is the first three digits of the basic personal allowance of £11,500.
BR – under this code, all your income would be taxed at 20%
D0 – under this code, all your income would be taxed at 40%
D1 – under this code, all your income would be taxed at 50%
K – under this code, the standard personal allowance would be reduced. This is a ‘negative’ tax code.
T – if someone had tax code 123T, then their personal allowance would be (10*123)+5 = £1,235

National Insurance is a compulsory tax in the UK that allows the government to help people who are sick, unemployed or retired. So you get to see your doctor for free as a result of National Insurance (N.I) contributions.

There are two codes for National Insurance (NI) – NI code A and NI code D. NI code A applies to employees who are not contributing to a pension or have a pension that is “contracted out”. NI contributions are worked out on weekly earnings.

With NI code A, any weekly earnings below £155 would not incur any charges. Earnings between £157 and £866 per week attract a tax rate of 12%. And any weekly earnings over £866 attract a rate of 2%.

If you receive the State Pension then you don’t have to pay National Insurance contributions. We mentioned above that it was designed to help people, including those who are retired. For simplicity, our calculators do not apply National Insurance if you have ticked one of the ‘over 67’ boxes, as the retirement age in the UK is 67.

NI code D applies to those which pay into a “contracted-out” pension, as result NI contributions are reduced. Weekly earnings below £155 still do not attract a charge. However, a rate of 10.6% is applied to weekly earnings between £157 and £770. 12% is only applied to weekly earnings between £770 and £866. And 2% is applied to weekly earnings above £866. In addition, a rebate of 1.4% is received for weekly earnings between £113 and £157.

Your employer can clarify whether your pension is “contracted-out” or not. Your NI code may also be shown on your payslip. For further information on NI codes, please visit the HMRC website: https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions

Pensions
Contributions to your pension are tax free, but are limited at £50k per annum, after which the remainder is taxed at the rates which apply to your circumstances. Enter the percentage you pay for your pension in the pension field. This percentage will then be applied to your base salary and deducted from your income tax, up to a maximum of £50k.

Student Loan

There are two options to choose from here – “Student Loan-pre-Sep 2012” and “Student Loan-post-Sep 2012.”

Student Loan-pre-Sep 2012

If you finished your university course before September 2012, then you would repay 9% of your salary above £17,775 per annum towards your student loan.

Student Loan-post-Sep 2012

If you finished your university course AFTER September 2012, then you would repay 9% of your salary above £21,000 per annum towards your student loan.

Car allowance
If your car benefit is £5,000, then £5k would be reduced from the basic personal allowance, so your tax code would become 560L (instead of 110L) for someone with a company car.
K – this is a negative code, which means the individual would pay more tax.
Eg if car benefit was £13,000 and the person’s personal allowance was £11,500 then they’d be £2,000 over the pa, and would have to pay tax on that £2k.
L, P, Y, T
These letters usually appear at the end of the tax code eg 944L.
L – basic tax allowance/std code.
P – pensioner and hence getting age related allowance
Y – full personal allowance for people over 75
T – tax has to be reviewed at end of year eg if individual had car benefit

Childcare Vouchers
Employees with children can sometimes opt to receive some of their salary in the form of Childcare Vouchers. You can receive as much of your salary as you wish through vouchers, but there is a limit to the amount which can be received tax-free. For basic rate tax payers, or those who joined voucher schemes before 6th April 2011, this limit is £2,915 per year. If you pay 40% tax and joined the scheme after 6th April 2011 this limit is £1,484 per year, and for those paying 45% tax it is £1,166.