1. What is UK Income Tax and National Insurance?

UK Income Tax and National Insurance are two separate taxes on earnings. Income Tax is progressive with different rates, while National Insurance funds state benefits and has different thresholds and rates.

2. How Does the Calculator Work?

The calculator uses current UK tax thresholds and rates:

Where:

• Income Tax — Calculated using Personal Allowance, Basic Rate (20%), Higher Rate (40%), and Additional Rate (45%) bands
• National Insurance — Calculated using Primary Threshold (12%) and Upper Earnings Limit (2%) rates

Explanation: The calculator applies tax bands progressively and accounts for the different NI thresholds.

3. Importance of Tax Calculation

Details: Understanding your tax liability helps with financial planning, budgeting, and ensuring you're paying the correct amount of tax.

4. Using the Calculator

Tips: Enter your gross annual salary in GBP and select the tax year. The calculator will show your Income Tax, National Insurance, total tax, and net income.

5. Frequently Asked Questions (FAQ)

Q1: Are pension contributions considered?
A: This calculator shows pre-pension tax amounts. Pension contributions may reduce your taxable income.

Q2: What about student loan repayments?
A: Student loan repayments are not included in this calculation as they depend on your specific plan.

Q3: How often are tax thresholds updated?
A: Tax thresholds typically change each tax year (starting April 6th).

Q4: Does this include Scottish tax rates?
A: No, this calculator uses UK-wide rates. Scotland has slightly different income tax bands.

Q5: Why is National Insurance calculated differently?
A: NI has different thresholds and rates because it funds specific state benefits like the NHS and state pension.