The Salary Calculator

April 2014 tax rates applied

by Admin

The Salary Calculator has been updated with the latest tax information which takes effect from 6th April 2014.

There is an increase in the default tax free personal allowance from £9,440 to £10,000, which will reduce the amount of tax due for most taxpayers. Slight increases in the National Insurance thresholds will also help improve the takehome pay for many people.

The most significant change is probably the increase in the repayment threshold for plan 1 student loans from £16,365 per year to £16,910, which will save those repaying their loan nearly £50 over the year. Unfortunately of course, this will just mean it will take longer to repay the loan in the long run but hopefully the extra cash in your pocket will be useful now!

Another significant change this year, which is unlikely to affect any but those who are well paid and nearing retirement, is a reduction in the maximum amount you can put into a pension while still claiming full tax relief – for 2013/14 this limit was £50,000 but from 2014/15 it will be £40,000. If this is likely to affect you, you still have time to make the most of the 2013/14 pension allowance before the end of the tax year!

To see how you will be affected by the new tax rates, go to The Salary Calculator and choose the 2014/15 tax year from the drop-down box. Alternatively, you can view a side-by-side comparison of 2013 and 2014 tax rates.

Tags: 2014, April 2014, HMRC, income tax, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

4 Comments to April 2014 tax rates applied

1. 

   Hi, I am wondering if you can help me with something here . I work in two jobs (15hrs + 20 hrs) with the same employer- both are part time and permanent. When I am using the pro rata section from your site – for the two jobs the total amount that i am getting with the two seperate calculations are approx £1500 however I am getting paid only £1300 approx from the two salary slips ..Now I do understand this could be because both jobs are taxed and taxes are more with two seperate jobs .. Can we have a calculator that takes into account two jobs at the same time and gives a combines calculation ? Is there a way i can tell you the figures and you could help me understand if I am receiving the correct amount? This will be a big favour . Much Thanks
Faith on February 27th, 2014
2. 

   Hi Faith,

   Thanks for your suggestion! I like the idea of a calculator for two jobs, and in fact it’s already on my (long) “To Do” list. It’ll take me a little while to do this, though, but I’ll update the blog here when it’s done.

   In the meantime – income tax is due on earnings whether you got the money through one job, two jobs, or any number of jobs, which means you only get your personal allowance once. As you’ve discovered, this means that if you have one job paying £12k and one paying £7k, say, you will pay tax as though you had one job paying £19k.

   The story is a bit different for National Insurance – the thresholds are normally per job, so the NI deductions would be less in total on the £12k / £7k jobs than on the £19k job. However, you mentioned that both of these jobs are with the same employer, and I believe in that case the NI deductions are the same as if you had one job with the total salary.

   What this means is that you should be able to use the pro-rata calculator as you have done to work out each job’s salary, then add together the salaries to get your total salary and use the normal take home calculator to get a good idea of what your deductions should be. If you’re in any doubt, your employer’s HR or payroll department should be able to explain your deductions.
admin on February 28th, 2014
3. 

   Hi there I am looking for some light to be shed on my pay, I have currently earned £37500 this year but with my feb pay this will take me over £41000 does this mean I will start paying 40% tax on all monies over the £40000?
Douglas on February 9th, 2015
4. 

   Hi Douglas,

   There are a couple of things to note here. First is that (as you can see on the page about the Salary Calculator) if you have the standard £10,000 tax-free personal allowance (i.e. a tax code of 1000L), the 40% threshold for 2014/15 is actually £41,865, not £40,000. The other is that, unless you’ve had a recent pay rise or bonus which has increased your income, the tax thresholds are spread evenly throughout the year – this means that if your salary is £45k, say, you pay a little bit of tax at 40% every month, rather than 20% for most of the year and then a big hit of 40% in your last few payslips. The same is true of the tax-free personal allowance – you don’t use that up in your first few payslips of the year, then pay 20% on all of your income each month.
   If your personal allowance is reduced from £10,000, perhaps because of benefits like health insurance or a company car, then you might go over the 40% threshold – but this will have applied all year, unless your income has varied from month to month.
   In some rare cases, like if you are a director of a company, your personal allowance and tax thresholds might not be spread throughout the year but rather used up “cumulatively” – if this applied to you your employer would normally have made this clear.
   I hope this helps!
admin on February 9th, 2015

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