The Salary Calculator

Your total tax bill for the year is…

by Admin

Although The Salary Calculator helps you to see how much of your salary gets eaten up by income tax, National Insurance and other deductions, there are other ways in which the government gets its hands on your money. There’s council tax, for example. VAT on goods and services. And fuel duty on petrol and diesel.

The guys and girls at Money Sense, run by paydayloan.co.uk, have created an interactive tool that lets you see how much more tax you pay during the year through other means. Try out their tax calculator and see what percentage of your income goes to the government in one form or another.

Tags: council tax, fuel duty, income tax, Jobs, national insurance, Pay As You Earn, petrol, tax rates, VAT

Becoming self-employed rather than un-employed

by Admin

I read an interesting article this morning on the BBC News website about the phenomenon of people who are unemployed deciding to become self-employed rather than keep looking for “traditional” employment. Apparently, a significant number of people have found that it is difficult to find a job, but that they have been able to start and run promising businesses themselves – something they have found much more fulfilling than taking Jobseeker’s Allowance.

Our sister site Employed and Self Employed has a tax calculator you can use to see how much tax and National Insurance would be deducted from self employment profits, if you are thinking of starting your own business. There is also a more complex calculator if you already have a job but are thinking of becoming self-employed in your spare time – you can work out how much of your profits you would be able to keep hold of.

If you are unemployed and thinking of starting your own business, you may be eligible for some funds from the government to help you get started. More information is available here about the New Enterprise Allowance.

Tags: careers, Employed and Self Employed, income tax, Jobs, NEA, New Enterprise Allowance, Pay As You Earn, self employed, The Salary Calculator, unemployment

Salary Sacrifice and charitable giving

by Admin

A new update to The Salary Calculator allows you to enter deductions which were previously not available. Among the usual options is one for Salary Sacrifice, if you have contractually agreed to reduce your salary by a certain amount in exchange for receiving some other benefit. There are also new options for pre-tax deductions such as Gift Aid and Give As You Earn and after-tax deductions which are just taken out of your payslip each month.

Salary Sacrifice is often used for pension contributions, but The Salary Calculator already has an option for Salary Sacrifice pensions under the “Pension” tab where you can enter a percentage of your salary to be deducted. If you prefer to enter the monthly (or annual) £ amount that you are sacrificing, you can leave the pension field blank and enter the £ amount in the “Salary Sacrifice” tab. Alternatively, you might be making a salary sacrifice for benefits other than a pension (or in addition to a pension) – in which case just enter the amount you’ve sacrificed into the new field.

The “Other Deductions” tab has two new fields on it. One is for pre-tax deductions, like Gift Aid or other charitable contributions like Give As You Earn. The second is for after-tax deductions – i.e. an amount deducted from your take-home pay each month with no impact on your tax or National Insurance.

Head over the The Salary Calculator to check out these new options. I hope you find these new options useful – if you have any feedback or thoughts (or suggestions for other things to be added), please let me know!

Tags: charity, deductions, GAYE, give as you earn, income tax, national insurance, pension, salary sacrifice, The Salary Calculator

April 2013 tax rates applied to The Salary Calculator

by Admin

The Salary Calculator has been updated with the latest income tax and National Insurance rates from HMRC which will take effect from 6th April 2013. Although for the moment the current 2012/13 tax year will be applied to calculations by default, you can choose the 2013/14 tax year from the drop-down box to see what your pay slip will look like later this year. You can also see a summary of the 2013/14 values under the normal results, and there is a special Comparison page where you can see 2012 and 2013 side-by-side.

The biggest changes for most people will probably be:

• Tax-free personal allowance increased from £8,105 to £9,440
• Student Loan repayment threshold increased from £15,795 to £16,365
• Additional rate tax for those earning over £150,000 reduced from 50% to 45%
• Over-65 and Over-75 personal allowances not increased

The last of these points was called the “Granny Tax” by detractors when it was first announced, although it is not actually an introduction of a new tax. Previously, those over 65 and over 75 had larger tax-free personal allowances which, like the Under-65 allowance, was increased each year. From April 2013, these allowances will no longer be increased each year and will remain at their current values of £10,500 and £10,660 respectively – until the Under-65 allowance catches up with them. Also, these allowances will no longer be applied to people reaching the qualifying age – only those who were born before 6th April 1948 (or 6th April 1938 for the upper allowance) will receive these allowances. Those reaching these threshold ages after 6th April 2013 will not receive the additional allowance.

Those who are fortunate enough to be earning more than £150,000 will see their tax rate on income over that limit reduced from 50% (where it has been since this tax was introduced in April 2010) to 45%. You might think that, with personal allowances going up and tax rates coming down, everyone will be better off from the start of the new tax year. However, there is a set of people who will find that they pay more tax in the 2013/14 tax year than they did in the 2012/13 tax year, due to a rule which applies to those earning over £100,000.

If you earn more than £100,000 in the year, the tax-free personal allowance is gradually reduced at a rate of £1 for each £2 you earn over the £100,000 limit. Those earning £118,880 or more in 2013/14 will therefore have no tax-free allowance. Because the threshold between 20% and 40% tax has been reduced, those who earn between about £117,000 and £157,000 will find that they actually pay more tax than they did the year before – when those earning less and those earning more will each pay less than they did the year before.

If you want to see how the April 2013 income tax rates will affect you, you can get started with The Salary Calculator or try the 2012 / 2013 Income Tax Comparison.

Tags: 45% tax, 50% tax, April 2013, income tax, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

Childcare voucher petition

by Admin

Since my blog post about childcare vouchers earlier this week, I’ve heard from the people at Busy Bees Benefits, one of the companies that offer childcare voucher schemes to employers, like those I described in my blog post. They told me about a petition they have launched to increase the value of vouchers that could be received by parents tax-free.

As I described in my previous post, the value of vouchers that can be received tax-free is currently £2,915 per year, or £55 per week. This limit has been the same since 2006, but many parents are finding that the cost of childcare has increased in the years since then so the vouchers do not cover as much of their childcare fees. Busy Bees Benefits are trying to get this limit raised to £75 per week (£3,975 per year), and the first step is to get 100,000 signatures on the petition so the proposal can be debated in Parliament. Increasing the tax-free limit would allow parents to sacrifice more of their salary in exchange for vouchers, therefore saving more tax and National Insurance.

More details are available on the Busy Bees Benefits childcare voucher petition page, where you can learn more and sign the petition if you want to back the change!

Tags: childcare vouchers, income tax, national insurance, Pay As You Earn, The Salary Calculator