The Salary Calculator » HMRC

Emergency Budget Update

admin — Tue, 22 Jun 2010 20:57:23 +0000

The new Chancellor of the Exchequer gave the coalition government’s first Budget today, within 50 days of the election as promised. There were a great many changes, most of which will take place from April 2011, so I have added a new row to The Salary Calculator to give an indication of what the impact might be.

Unfortunately, a lot of the figures won’t be confirmed until towards the end of this year, so I have had to make some estimates based on what was described in the Emergency Budget report. For those who want to know, details of the figures I’ve used are below. For those who don’t – you can go straight to the “April 2011″ row of the Salary Calculator for April 2011 values.

Another change announced in the Budget was an increase in standard VAT rate from 17.5% to 20% effective from 4th January 2011. The VAT Calculator has also been updated so you can see what a difference this will make to purchases.

The calculations for the April 2011 values in The Salary Calculator are based on the following assumptions. Under 65 personal allowance increased to £7,475, over 65 allowances not changed. Threshold of 40% tax lowered to £35,400 from £37,400. National Insurance rates increase from 11% to 12% for basic and 1% to 2% for additional, as set out by the previous government’s budget. National Insurance basic rate threshold increased to £7,475, additional rate lowered to £42,875. All other values unchanged.

Most of these values are just estimates – they will be adjusted in line with inflation and confirmed towards the end of 2010, when The Salary Calculator will be updated.

Coalition pledges to affect tax

admin — Wed, 12 May 2010 20:53:07 +0000

So we’ve got a new, coalition government and they have published the details of the agreements which were reached between the Conservative and Liberal Democrat parties. As you can see in the linked article, campaign pledges from both parties were included in the agreement, reflecting the compromises necessary.

They have promised that a new budget will be announced within 50 days, which will include changes to PAYE taking effect from April 2011. These changes will include increasing the income tax personal allowance to reduce taxes for low and middle earners (although not immediately the full increase to £10,000 the Lib Dems wanted), but the employee National Insurance threshold changes the Conservatives put in their manifesto will not be included. However Labour’s planned increase in employer National Insurance will not go ahead, pleasing Conservative supporters.

Full details will not be available until the promised emergency budget, but I promise to make available as soon as possible any relevant changes to The Salary Calculator!

The VAT Calculator launched

admin — Sat, 03 Apr 2010 14:55:43 +0000

I’m pleased to announce the launch of The Salary Calculator’s sister site, The VAT Calculator. The VAT Calculator allows you to either enter a price to which VAT should be added to give the total, or to enter the total price and calculate what the price was before VAT.

Yes – it’s two relatively simple calculations, but I hope it that some visitors will find it useful! Comments and suggestions are as ever welcome, either here at The Salary Calculator or email The VAT Calculator.

Take a look at The VAT Calculator.

2010 Budget announced

admin — Wed, 24 Mar 2010 22:34:46 +0000

Today, the Chancellor of the Exchequer announced his Budget for the tax year starting 6th April 2010. There were no real surprises and a summary of the changes is on the BBC website here.

The Salary Calculator has already been updated, as described in a previous post, so the April 2010 values are used for both National Insurance and tax calculation. Details of the values used are on this page about the Salary Calculator, check it out and see whether the new tax rates will affect you!

April 2010 rates applied

admin — Wed, 03 Mar 2010 22:39:18 +0000

It’s that time of year again – The Salary Calculator has been updated with the latest tax information which takes effect from 6th April 2010.

As reported at the end of last year, for most people there’s actually no difference between the 2009 figures and the 2010 ones. Personal allowances are staying the same (whereas they usually go up), as are National Insurance payment thresholds.

However, there are some changes for those earning over £100,000 – personal allowances are reduced by £1 for every £2 your salary goes over £100,000, and there is a new 50% tax rate for taxable income over £150,000. So while most of the population will find their payslips unchanged come April, the highest earners will find themselves significantly worse off.

To see how you’re affected, try out The Salary Calculator with your salary. The details of the figures used by The Salary Calculator are available on the About page.

Useful links:

Pro-rata calculations

admin — Tue, 18 Aug 2009 22:14:57 +0000

Recently, I’ve had a couple of requests from users of the site to have a pro-rata calculator on the site, so you can work out what your new pay would be if you go down to reduced hours or enter a job share of some sort. Unfortunately, I’ve not had time to make this new tool, but it is easy to use the existing calculator to work out your pro-rata pay.

For example, if you are working 20 hours a week instead of 37.5:

If you know the hourly rate for the job, use the Hourly Rate Calculator, enter that rate and 20 hours – the calculator will show you the take home pay.
If you just know the annual salary for 37.5 hours a week, first divide the salary by 37.5, then multiply it by 20. Enter this new salary into the normal calculator and it should give you the right information.

According to HMRC, tax, NI etc are all worked out the same whether you worked 37.5 hours to earn the money, or just 20 (or 1!). The above tricks can show you what you need to know until I have time to create a pro-rata calculator.

New, higher tax rate

admin — Sun, 14 Jun 2009 13:48:45 +0000

From April 2010, new tax rates will take effect. Most of us won’t be affected by the changes, as they only affect those with annual income in excess of £100,000.

The first change is the creation of a new income tax band for taxable income above £150,000, which will be taxed at a rate of 50%. This will make a significant difference to anyone who does earn this much as they currently are paying only 40% on this income.

The second change is a reduction of the personal allowance of £1 for every £2 your income is over £100,000. Your personal allowance is the amount you are allowed to earn without paying tax – by reducing this allowance the government are able to take more tax off your hands. In fact, I have calculated that whereas currently for every extra £2 you earn over £100,000 you take home £1.20, those of you lucky enough to be in this pay bracket will be taking home only £0.80 of that £2 from April 2010.

The Salary Calculator will be updated with these new rates early in 2010 when the details of personal allowances and other thresholds for that tax year are made available.

More details are available on the HMRC website here (PDF).