income tax
Bonus payments added!
As requested by a large number of visitors to the site, The Salary Calculator has been updated to allow you to enter bonus payments. If you might earn a bonus from your employer one month, you can now use the calculator to see what kind of a difference it will make to your payslip that month.
Bonuses are typically paid as a one-off extra on top of your usual salary. Your employer will work out what extra deductions (tax, National Insurance and Student Loan) will be required that tax year because of this extra payment, and will add these on top of your usual deductions for that month. Yes, this unfortunately means that you’ll pay a lot of tax, NI and Student Loan that month (boo!) – but some of your bonus will be left for you to enjoy!
For the purposes of displaying the information The Salary Calculator assumes that your salary is normally paid monthly, and shows you what a bonus month would look like compared to a normal month. Similar calculations will be done by your employer if you are paid weekly. To get started, click here to check out The Salary Calculator with bonus payments.
April 2011 rates applied
The April 2011 tax and National Insurance rates have been applied to The Salary Calculator.
In comparison to last year, when rates for most of us were unchanged, there are a number of differences which will mean that your payslip will be different next month.
The standard personal allowance (the amount you can earn tax-free) is increasing by a thousand pounds to £7,475, but this is mitigated in some way for higher earners by the threshold for 40% tax being lowered to £35,000. Similarly, NI rates increased by one penny in the pound (to 12% and 2%) but the threshold for paying NI increased so lower earners may not be too badly affected.
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:
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!
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.
The Salary Calculator goes mobile!
The mobile version of The Salary Calculator has been launched – a smaller version of the take home pay calculator, suitable for smart phones (and hopefully some older phones too) is now available – The Salary Calculator Mobile.
Store this link in your phone for when you need to check calculations and you’re not near a computer or you only have mobile internet. It’s been designed to fit easily onto a mobile screen and be quicker to download than the normal site. If you have any problems or find that it is not displaying correctly on your phone I would be very interested to know the details – please email with details of the phone you are using and the problem you are having.
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