The Salary Calculator

Tax codes added to The Salary Calculator

After a great many requests from users of the site, I’ve finally added support for tax codes to The Salary Calculator. If you know what your tax code is, you can now use it on the take home pay calculator, hourly wage calculator and the required salary calculator to get a more accurate indication of your take home pay.

Tax codes exist because in some circumstances HMRC may adjust your personal allowance, often because of benefits like a company car or private healthcare. They do this by providing your employer with a tax code which indicates what your personal allowance should be.

The usual effect of such an adjustment would be to lower your personal allowance, meaning that you pay tax on more of your income. If you receive benefits such as private healthcare or a company car through your employer, you pay more tax on your salary so that the value of these benefits is also taxed.

Tax codes usually indicate the personal allowance by including a number which should be multiplied by 10 and have £5 added to it to make the personal allowance – e.g. the standard code 647L indicates a personal allowance of £6,475.

• L, P, Y and T codes indicate the personal allowance to be assigned as described above
• K codes indicate the amount by which the taxable income should be increased, if you owe tax on other earnings which should have been taxed
• A BR code indicates you pay 20% basic rate tax on all income
• A D0 code indicates you pay 40% tax on all income
• An NT code indicates you pay no tax

In most cases your tax code will stay the same if you change jobs, so now you can use The Salary Calculator to get a more accurate indication of what a pay rise or a new job would mean to you each month!

Tags: HMRC, income tax, Pay As You Earn, personal allowance, tax rates

Emergency Budget Update

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 allowance increased to £9,940, over 75 allowance increased to £10,090. Threshold of 40% tax lowered to £35,000 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.

Edit (5th January 2011): The values above have been updated with the latest information from the Treasury and the April 2011 calculations have been updated in line with these. The Salary Calculator will be updated again with final values in early Spring 2011, following the budget update.

Tags: 20% VAT, April 2011, budget, coalition budget, Economy, election, emergency budget, HMRC, income tax, June 2010 budget, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator, VAT

Coalition pledges to affect tax

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!

Tags: April 2011, budget, Economy, election, HMRC, income tax, national insurance, Pay As You Earn, pension, Pensions, personal allowance, recession, recovery, tax rates, The Salary Calculator

The VAT Calculator launched

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.

Tags: HMRC, Income Tax, tax rates, value added tax, VAT, VAT Calculator

2010 Budget announced

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!

Tags: 50% tax, April 2010, Economy, HMRC, income tax, national insurance, National Insurance, Pay As You Earn, personal allowance, tax rates