The Salary Calculator

2010 Budget announced

by Admin

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

April 2010 rates applied

by Admin

It’s that time of year again – The Salary Calculator has been updated with the latest tax information which takes effect from 6th April 2010.

As reported at the end of last year, for most people there’s actually no difference between the 2009 figures and the 2010 ones. Personal allowances are staying the same (whereas they usually go up), as are National Insurance payment thresholds.

However, there are some changes for those earning over £100,000 – personal allowances are reduced by £1 for every £2 your salary goes over £100,000, and there is a new 50% tax rate for taxable income over £150,000. So while most of the population will find their payslips unchanged come April, the highest earners will find themselves significantly worse off.

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:

• HMRC Income Tax info sheet
• HMRC National Insurance info sheet

Tags: 50% tax, April 2010, HMRC, income tax, Pay As You Earn, pension, Pensions, personal allowance, tax rates, The Salary Calculator

Pre-budget report

by Admin

Earlier this week the Chancellor of the Exchequer gave his pre-budget report, which gives us a preview of what he will announce in next year’s budget. For personal income, there were a couple of things to note. Firstly, the personal allowance (the amount that everyone can earn without paying income tax) is not increasing as it normally does in April 2010, and nor are the thresholds for National Insurance contributions. The Chancellor says that this is because the Retail Price Index (RPI) shows that deflation over the past 12 months means that in real terms we will be better off than a year ago even without the usual increase.

As already announced, there will be a new higher tax rate of 50% for income over £150,000, and personal allowances will be reduced gradually to zero for those earning over £100,000 (by £1 for every £2 earned over this limit).

The Salary Calculator will be updated with these details early in 2010, but as you can see, only those earning over £100,000 will find their take-home pay changing in April 2010. Everyone else will have the same personal allowances and the same tax and NI rates, so take-home will remain as before.

However, there was also news in this pre-budget report that there are plans to increase National Insurance contributions by 0.5% from April 2011, but also to raise the NI threshold so that those on lower salaries are not negatively affected. The details are not yet clear (and of course, there is an election between now and then so it may not come to pass) but whatever the changes for 2011 turn out to be, The Salary Calculator will be updated at that time.

Tags: 50% tax, April 2010, election, income tax, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

New, higher tax rate

by Admin

From April 2010, new tax rates will take effect. Most of us won’t be affected by the changes, as they only affect those with annual income in excess of £100,000.

The first change is the creation of a new income tax band for taxable income above £150,000, which will be taxed at a rate of 50%. This will make a significant difference to anyone who does earn this much as they currently are paying only 40% on this income.

The second change is a reduction of the personal allowance of £1 for every £2 your income is over £100,000. Your personal allowance is the amount you are allowed to earn without paying tax – by reducing this allowance the government are able to take more tax off your hands. In fact, I have calculated that whereas currently for every extra £2 you earn over £100,000 you take home £1.20, those of you lucky enough to be in this pay bracket will be taking home only £0.80 of that £2 from April 2010.

The Salary Calculator will be updated with these new rates early in 2010 when the details of personal allowances and other thresholds for that tax year are made available.

More details are available on the HMRC website here (PDF).

Tags: 50% tax, April 2010, HMRC, Income Tax, income tax, Pay As You Earn, personal allowance, tax rates