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

Bonus pay periods

by Admin

Prompted by a comment from Rob on the original blog post, back from when support for bonus payments was added to The Salary Calculator (original post here), The Salary Calculator has been updated so that you can choose your normal pay period when you enter a bonus. Previously, the calculator assumed that you were paid on a monthly basis, and displayed a normal monthly payslip alongside a payslip including the bonus. Now, you can choose whether you are paid monthly, 4-weekly, 2-weekly or weekly and see a side-by-side comparison of a normal payslip with one including your bonus.

It’s important to note that your employer may not perform their bonus calculations in the same way – sometimes (particularly near the start of the tax year) you may have more tax and NI deducted than predicted by the calculator. Normally these over-deductions are corrected in subsequent payslips.

Head this way for the Salary Calculator with bonus payments!

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