The Salary Calculator

New – choose your tax year!

by Admin

The Salary Calculator has (finally!) been updated so that you can choose to view calculations for different tax years. You will see that there is now a drop-down box in which you can choose the tax year that should be applied. By default, the current 2012/13 tax year will be selected so if you just want to see current values you do not need to do anything.

Details for previous tax years going back as far as the 2005/6 tax years have been made available, so you can see how your take-home pay has changed over the years. You may have forgotten how the personal tax-free allowance has increased over the past few years, which gives you more to take home – or perhaps you’d just like to see how far your salary would have gone a few years ago.

I do plan to add more past years (i.e. before the 2005/6 tax year) to The Salary Calculator, and of course, when the details of 2013/14 and further forward become available, they will be added to the site. Head over to The Salary Calculator to try it out. Please let me know in the comments below if you find this option useful or not!

Tags: 2005, 2006, 2007, 2008, 2009, April 2010, April 2011, April 2012, income tax, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

Childcare Vouchers added!

by Admin

The Salary Calculator has been updated with a new option for Childcare Vouchers. Some employers offer employees the opportunity to have some of their pay in the form of vouchers which can be exchanged with accredited childcare providers instead of cash. These vouchers can be taken tax-free, saving the employee money.

Childcare vouchers are subtracted from your salary before tax and National Insurance, like pension contributions. However, there is a limit to the amount that can be taken tax-free each year – for the current tax year, this amount is £2,915. You can receive childcare vouchers above this amount, but you will not get the tax benefits. If you signed up for the voucher scheme before 6th April 2011, this limit applies no matter how much you earn. However, if you joined the scheme after this date and pay tax above the 20% Basic Rate, the amount you can receive tax-free is reduced. For those paying 40% tax (typically earning £42,475 or more), the tax-free allowance for childcare vouchers is £1,484 – and for those paying 50% tax (earning over £150,000) it is just £1,166.

To see how childcare vouchers can affect your take-home pay, head over to The Salary Calculator and enter your salary, along with the value of vouchers you receive each month. If you joined the scheme before 6th April 2011, tick the box to this effect. Enter the rest of your details and click Go! to see the results.

Tags: April 2011, childcare vouchers, income tax, national insurance, Pay As You Earn, pension, Pensions, The Salary Calculator

Raising the personal allowance

by Admin

The personal allowance is the amount of money you are allowed to earn each year before you start paying income tax. As mentioned in a recent BBC article, Nick Clegg and the Liberal Democrats made an election pledge to raise the personal allowance to £10,000 (at the time of the election, the personal allowance was £6,475). As part of the coalition government the Conservatives and the Lib Dems agreed to make this increase before 2015, and last year the threshold was increased by £1,000 to £7,475 – although, as I reported at the time, the threshold for 40% tax was lowered at the same time so that those earning more would start paying 40% tax sooner.

This April, the standard allowance for the under-65s is set to increase again, this time to £8,105. This is less of an increase than last year (a change only of £630) but it will still make a significant difference to those on lower incomes. Nick Clegg is pushing for the threshold to be raised quicker than that, but the Conservatives are resisting it for now – the main reason for this being that the lost tax would have to be paid for elsewhere. This could mean either increasing other taxes or making further cuts.

The personal allowance is affected by your tax code, which means you may not receive the standard tax-free amount. More information about tax codes in this blog post.

The Salary Calculator will be updated in early Spring with the tax thresholds and rates for April 2012.

Tags: April 2011, April 2012, HMRC, income tax, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

April 2011 rates applied

by Admin

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:

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

Tags: April 2011, HMRC, income tax, national insurance, Pay As You Earn, pension, personal allowance, tax rates, The Salary Calculator

20% VAT from 4th January 2011

by Admin

As you are probably aware, in June this year the Chancellor announced in his emergency budget that VAT (Value Added Tax) would increase from 17.5% to 20% from the 4th January 2011. This will mean a small increase in the cost of most goods and services, as suppliers will have to increase the price they charge to cover the extra VAT they are having to pay to the Government.

Although a lot of people wait until the January sales before making a large purchase, in some cases you might find that it’s worthwhile to buy before the end of the year so that you only pay the lower 17.5% VAT. However, bear in mind that the amount of VAT increase is only small (a little over 2%) compared to the kind of discounts often offered in January sales.

For large purchases, such as a new car, the VAT increase could lead to a significant increase in price so it is worth checking what the VAT increase means for you. Fortunately, over at our sister site The VAT Calculator we have created a simple tool that shows you how much more something will cost if you buy it after the VAT increase. Just enter the current cost (including VAT) and see what the cost changes to with 20% VAT – try out the 20% VAT comparison calculator.

You can learn more about VAT by reading the information here.

Tags: 2011, April 2011, January 2011, tax rates, The VAT Calculator, value added tax, VAT