1. What is UK Income Tax and National Insurance?

UK Income Tax and National Insurance are mandatory contributions paid by employees and employers. Income Tax is calculated based on earnings after the Personal Allowance, while National Insurance provides entitlement to certain state benefits.

2. How Does the Calculator Work?

The calculator uses the following formulas:

Where:

• Income Tax - Calculated in bands: 20% basic rate, 40% higher rate, 45% additional rate
• National Insurance - 12% on earnings between £12,570-£50,270, 2% above £50,270
• Personal Allowance - £12,570 (tax-free allowance)

3. Importance of Tax Calculation

Details: Understanding your tax liabilities 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. The calculator will show your estimated Income Tax, National Insurance contributions, and total tax burden.

5. Frequently Asked Questions (FAQ)

Q1: Are these the exact 2025 tax rates?
A: This calculator uses the latest available rates. Always check HMRC for official rates as they may change.

Q2: Does this include student loan repayments?
A: No, this calculator only shows Income Tax and National Insurance. Student loans are calculated separately.

Q3: What about pension contributions?
A: Pension contributions can affect your taxable income but aren't accounted for in this basic calculator.

Q4: How often are tax rates updated?
A: Tax rates are typically reviewed annually in the UK Budget.

Q5: Is National Insurance really a tax?
A: While technically a contribution, it functions similarly to a tax on earnings and is calculated separately from Income Tax.