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

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

Salary sacrifice and personal pensions

by Admin

For many years, The Salary Calculator has allowed you to enter a percentage of your salary to be deducted as contributions to a pension. However, only employer (or occupational) pensions have been supported. Now, the calculator has been updated to allow you to specify whether your contributions are to an employer pension (as before), a salary sacrifice scheme, or a personal pension.

These three different types of pensions have different regulations applied to them, which means they affect your take-home pay in different ways. Your income tax, National Insurance contributions and even student loan deductions might be different depending on the type of pension scheme you are paying into. More information about the different pension types is on The Salary Calculator “About” page.

Choose the “Pension” tab on The Salary Calculator to see the new options and see how it affects your take-home pay!

Tags: employer, income tax, national insurance, pension, pension scheme, Pensions, personal pension, salary sacrifice

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

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