1. What is UK Tax Calculation?

The UK tax system consists of Income Tax and National Insurance Contributions. Income Tax is calculated based on your earnings above the Personal Allowance, while National Insurance is calculated separately with different thresholds and rates.

2. How Does the Calculator Work?

The calculator uses the current UK tax formula:

Where:

• Income Tax — Calculated in bands: 20% basic rate, 40% higher rate, 45% additional rate
• National Insurance — 12% on earnings between Primary Threshold and Upper Earnings Limit, 2% above
• Personal Allowance — £12,570 (2023-2024 tax year)

3. Importance of Tax Calculation

Details: Understanding your tax liabilities helps with financial planning, budgeting, and ensuring you pay the correct amount of tax.

4. Using the Calculator

Tips: Enter your gross annual salary in GBP and select the appropriate tax year. The calculator will show your Income Tax and National Insurance contributions.

5. Frequently Asked Questions (FAQ)

Q1: What is the Personal Allowance?
A: The amount you can earn before paying Income Tax (£12,570 in 2023-24). This may be reduced if you earn over £100,000.

Q2: Are National Insurance rates different from Income Tax?
A: Yes, NI has different thresholds and rates (12% main rate, 2% on higher earnings).

Q3: What if I have other income sources?
A: This calculator only considers employment income. Other income (rental, dividends, etc.) may be taxed differently.

Q4: Does this include student loan repayments?
A: No, student loan repayments are calculated separately and deducted through PAYE.

Q5: How often are tax rates updated?
A: Tax rates and thresholds are typically announced in the annual Budget and change each tax year (starting April 6th).