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

What would a 30% flat tax be like?

by Admin

Earlier this month, the 2020 Tax Commission published a report promoting replacement of our current income tax system, which has varying rates of tax (from 20% to 50%) and National Insurance (typically 12% and 2%), with a simpler system which has a single flat tax at a rate of 30%. They also recommended raising the personal allowance (the amount you can earn tax-free) to £10,000 per year, from its current £8,105.

I thought it would be interesting to see how this plan, if implemented, would affect us when we get paid each month. The following chart compares the April 2012 tax rates in blue with the simplified version in red:

As you can see, under this proposal everyone who currently pays tax on employment would take home more money each month, as the total amount due would be less. The 2020 Tax Commission say that as part of this plan, schemes that currently allow people to take income through a business, avoiding National Insurance, would be removed. This might mean that people who are using such schemes to avoid tax at the moment would pay more under the proposal.

But, as you’ve probably realised, if (almost) everyone is paying less tax, that means the Government will get less money. This is indeed true – the gap between the two lines on the chart represents how much less the Government would get each year – and the commission also recommend abolishing inheritance tax and similar taxes, which would further reduce Government income. This would mean further cuts in public spending – which would be difficult to swallow at the moment. More reaction on the report is in this useful BBC article.

Tags: 2020 Tax Commission, 30% tax, April 2012, Economy, income tax, national insurance, Pay As You Earn, personal allowance, tax rates

Free Android app for The Salary Calculator

by Admin

A brand new app has just been launched on the Android Marketplace which allows you to use The Salary Calculator without being online. The Salary Calculator app allows you to perform salary calculations as you would on the website, but installed on your Android smartphone.

The app supports both annual salary and hourly wage calculations, including income tax, National Insurance and student loan repayments. You can also include overtime, pension contributions and tax codes, and view the results annually, monthly or weekly. It’s up to date with April 2012 data but you can choose previous tax years if you want to compare older rates. What’s more, the app is completely free to use!

Click here to get The Salary Calculator Android app.

Tags: android, app, income tax, mobile, national insurance, personal allowance, The Salary Calculator

Budget 2012 update

by Admin

Today, the Chancellor gave his annual budget speech in the House of Commons, outlining government spending plans for the next couple of years. The details of income tax and National Insurance from 6th April 2012 had already been provided, so as I have explained in a previous post, The Salary Calculator is up to date with the latest tax information.

However, the Chancellor took the opportunity to outline plans for income tax from April 2013, and there will be a few changes. Firstly, the under-65 tax free allowance will be increased from April 2013 to £9,205,  in line with the coalition pledge to increase the tax-free personal allowance to £10,000 before the next election. This is an increase of £1,100 on the April 2012 value, saving those on low and middle incomes up to £220 per year. However, the increased personal allowances currently available to those over 65 will be frozen and, for those not yet receiving the increased allowances, replaced by a single allowance for all ages (although this change will not take immediate effect).

Another change in 2013 will be to reduce the top rate of income tax, paid by those earning over £150,000 per year, from 50% to 45%. The 50% rate was introduced by the Labour government, where previously such income would have been taxed at 40%. This will be popular with traditional Tory voters but Labour are complaining that the richest are getting tax cuts in this time of austerity.

The Salary Calculator will be updated with the April 2013 values nearer the time – in the meantime, you can see what the April 2012 changes will make to your pocket each month by checking The Salary Calculator 2012. There is also a comparison utility so you can easily see the difference between 2011 and 2012.

Tags: 50% tax, April 2012, April 2013, Economy, HMRC, income tax, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator

New – graphical representation of salary deductions

by Admin

To help you to visualise where your income deductions are going, and how much of your money you get to keep (take-home pay), I thought I would add some pie charts to The Salary Calculator. Now, when you have entered your details and are viewing the table of results, there is an option to see a graphical representation of that information:

Click on this link, and an overlay will pop up, to show you an interactive pie chart that clearly explains where your money goes each year:

Of course, it will also show pension and student loan deductions if those apply to your calculations. To get started, head over to The Salary Calculator and enter your details. I hope you find this new tool useful – please use the comments section below to leave any feedback or suggestions for improvements.

Tags: income tax, national insurance, Pay As You Earn, Pensions, personal allowance, tax rates, The Salary Calculator