UK Tax Explained

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Every person earning money in the UK is liable for paying income tax – a percentage of your earnings are given to the UK government, to partially cover expenses such as NHS, infrastructure (roads, rails), welfare (benefits), and many more. The UK tax system might seem complicated at first, but its actually not as complex as it seems.

Here is simplified ilustration of how tax is paid in the UK:

  • Everyone has a tax free personal allowance of £12,500 (for earnings between Apr 2019-Apr 2020) – this means that on £12,500 from your salary you won’t pay any tax. You’ll only pay tax if you earn above this, and only for the sum above this value.
  • You will pay 20% tax on the first £37,500 after your personal allowance (for earnings from £12,500 to £50,000)
  • You will pay 40% tax on earnings between £50,000 and £150,000
  • You will pay 45% tax on earnings above £150,000
  • Another important thing is the fact that your personal allowance will start dropping after your earnings reach £100,000 – it will drop £1 for every £2 earned. Which means that as your earnings reach £125,000, your personal allowance will drop to £0.
  • There different tax rules for Scotland. To calculte you tax and net pay for Scotland, please use our advanced tax calculator.

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National Insurance Explained

Apart from income tax, you will also need to pay National Insurance (which is in fact another form of tax) if you earn above a certain limit. National Insurance is used primarily to fund NHS, state pension, state benefits and disability allowances. Here are some of the most important points about National Insurance (for PAYE employees):

  • You don’t pay national insurance on the first £8,632 you are earning
  • You’ll pay 12% NI on the earnings between £8,632 and £ 50,000
  • You’ll pay 2% NI on the earnings above £50,000

Now let's simulate a salary calculation for a yearly gross income of £45,000. (To change this value to your actual salary, scroll up and add it to the main input field at the top of the page.)

£ 45,000 Yearly Salary Illustration


£45,000 after tax break-down

Year Month Week Day Hour
Gross income £45,000 £3,750 £865 £173.00 £21.63
Personal allowance £12,500 £1,042 £240 £48.00 £6.00
Total taxable £32,500 £2,708 £625 £125.00 £15.63
Tax £6,500 £542 £125 £25.00 £3.13
National insurance £4,364 £364 £84 £16.80 £2.10
Net pay £34,136 £2,845 £656 £131.20 £16.40


Payslip for £45,000 salary

<- Scroll left-right ->
Employee No
015
Employee Name
Boris Johnson
Process Date
04/Apr/2020
National Insurance Number
NH000000F
Payments
Salary
Units
173.00
Rate
21.63
Amount
3,750
Deductions
PAYE Tax
National Insurance
Amount
542
364
<- Scroll left-right ->

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List of the most popular after tax calculations

Up to £10,000 yearly salary

Salaries below £10,000/year are usually offered for part-time jobs, where people work up to at most 20 hours a week. This approach is very typical to bar staff, waitresses, retail assistants, cleaners, and beauticians. This wage is very common among students , single parents, or stay-home mums where they find some extra activity while their toddler is attending the nursery. This income range is not taxed at all (Up to £ it's tax free), and they will only have to pay a minimum amount of NI on their earnings. See some of the after-tax and National Insurance calculations for some salaries from £1,000 to £10,000 a year:

£1,000 - £2,000 - £3,000 - £4,000 - £5,000 - £6,000 - £7,000 - £8,000 - £9,000 - £10,000

From £11,000 to £20,000

This range of salaries is offered to part time staff at the lower end, and to graduate students who have no strong skills, and people who are at the beginning of their career. This income range is also common for many factory workers, and for jobs where people are paid the minimum wage. These are usually called entry-level salaries for full-time workers.

See a list of the after-tax calculations for some salaries from £10,000 to £20,000 a year:

£11,000 - £12,000 - £13,000 - £14,000 - £15,000 - £16,000 - £17,000 - £18,000 - £19,000 - £20,000

From £21,000 to £30,000

This is the range of income that's the most common among millions of workers in the UK. Most low and average skilled level jobs are within this range of yearly earnings.

Let's see a list of the after-tax calculations for some salaries from £20,000 to £30,000 a year:

£21,000 - £22,000 - £23,000 - £24,000 - £25,000 - £26,000 - £27,000 - £28,000 - £29,000 - £30,000

From £31,000 to £50,000

The range of calculations from the list below starts at £30,000 a year, up to £50,000 a year. This income can be considered middle-class income, where entry-level engineers and most professionals are earning. Think of it as junior-to-mid level software developers, designers, paint sprayers, mechanics, builders - this is the range of salary that these professionals are getting. People earning under £50,000 will pay a lower percentage of tax that those earning above £50k.

See below a list of the calculations for the salaries from £30,000 to £50,000 a year:

£31,000 - £32,000 - £33,000 - £34,000 - £35,000 - £36,000 - £37,000 - £38,000 - £39,000 - £40,000 - £41,000 - £42,000 - £43,000 - £44,000 - £45,000 - £46,000 - £47,000 - £48,000 - £49,000 - £50,000

From £51,000 to £75,000

People earning in this range are considered to be earning a comfortable amount of salary to sustain a good lifestyle. Professions paying within this range are senior software developers, managers, high-performance sales people, medical practitioners, senior police officers, and business development managers. These earners will pay a higher percentage of taxes than those earning below £50,000.

See below a list of the calculations for the salaries from £50,000 to £75,000 a year:

£51,000 - £52,000 - £53,000 - £54,000 - £55,000 - £56,000 - £57,000 - £58,000 - £59,000 - £60,000 - £61,000 - £62,000 - £63,000 - £64,000 - £65,000 - £66,000 - £67,000 - £68,000 - £69,000 - £70,000 - £71,000 - £72,000 - £73,000 - £74,000 - £75,000

From £76,000 to £100,000

Some people might consider them well-off -people earning between this range can afford a great lifestyle, and they are usually paying high tax rates, due to their income being mostly in the higher rate tax band.

See below a list of the calculations for the salaries from £50,000 to £75,000 a year:

£76,000 - £77,000 - £78,000 - £79,000 - £80,000 - £81,000 - £82,000 - £83,000 - £84,000 - £85,000 - £86,000 - £87,000 - £88,000 - £89,000 - £90,000 - £91,000 - £92,000 - £93,000 - £94,000 - £95,000 - £96,000 - £97,000 - £98,000 - £99,000 - £100,000

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