How to use Salary Calculator
For a quick
estimation of your Take Home Salary, simply enter your yearly gross
salary and hit Calculate.
If you need more accurate calculation of your
Take Home, enter the Advanced Options(refer below) and calculate.
Financial Year, Age:
Financial Year, Age and your Income determine your
Personal Allowance and National Insurance. Personal allowance is
deducted from your gross salary before tax is applied on your salary.
Entering Financial Year and Age will provide a better estimate of
your Take Home Salary. The below table depicts Personal Allowance for
the financial year 2015/2016 based on your age.
Note: If your
are aged above 65, you pay no NI.
|Age in years
||Does not matter
||27,699 to 27,819
||10,660 - 10,600
||27,819 and above
If you know your Bonus, you can
enter it OR if you don't know your bonus, you can enter expected
amount to get an estimate of you take home and taxes. Note that Bonus
is treated as Salary so both Income Tax and NI applied on Bonus.
Employer Pension Contribution
the amount employer pays into your pension pot. This amount is not
deducted from your salary but paid by your employer as benefit.
Employer's pension contribution is tax and NI free. The calculator
lets you enter this as a percentage of your salary as employers
usually pay this a percentage of your salary.
Employee Pension Contribution
the amount deducted from your gross salary and paid into your pension
pot. Income Tax and NI are not applied on this amount.The calculator
lets you enter this as a percentage of your salary.
Child Care Vouchers
You can enter value
of child care vouchers availed under in the Tab 'Salary Sacrifice'.
Child care voucher is a form of salary sacrifice, your gross salary
will be reduced by the value of child care voucher availed. If your
employer offers child care vouchers, you can take advantage of the
scheme to lower your tax bill. However, note that child care vouchers
can lower the employer pension contribution as salary sacrifice will
actually reduce your salary. The value of child care vouchers you can
claim depends on your gross salary as show in the below table.
||Monthly Child Care Vouchers Eligibility
|£0 - £42,385
|£42,385 - £150,000
|Above £ 150,000
Cycle to Work Scheme
This is also a
form of salary sacrifice to save money on Tax and NI. It works like
this, you decide how much you want to spend on the bicycle and
related safety equipment(usually employers offer this upto an amount
of £1000), employer gives you a voucher for that amount. You take the
voucher to the approved retailer and pick your bike and related
safety equipment like helmet, lights, etc and pay with the voucher.
Note that you don't own the bike, your employer owns it and you lease
it, at the end of the lease period(usually an year) your employer
usually sell it to the employee( Usually for £5 or £10 !!). You are
required to use the cycle for more than 50% of your journeys. You can
enter value of cycle to work voucher availed under the Tab 'Salary
Take Home Salary Calculation
The below steps explain how the Salary Calculator calculates your
Take Home Salary, Income Tax and NI.
Step 1. Determine Taxable Income:
Taxable Income is obtained by deducting your personal allowance and
deductions for your gross salary.
Taxable Income = Gross Salary - Personal Allowance - Deductions (
Child Care Vouchers, Salary Sacrifice, Employee Pension Contributions
Step 2. Calculate Income Tax:
tax is calculated by applying the tax rates on your taxable income
20% for the income between £0 - £32,000
40% for the income
between £32,000 - £150,000
45% for the income above
Step 3. Calculate National Insurance:
National Insurance is calculated by applying the tax rates on your
taxable with out deducting the personal allowance. This is because
personal allowance is only applicable to Income Tax calculation.
However you only pay NI for amount over £7,956
0% for the income between £0 - £7,956
12% for the income
between £7,957 - £41,860
2% for the income above
Step 4. Take Home Salary Calculation:
Take home salary is calculating by deducting income tax, NI and
other salary deductions.
Salary = Gross Salary - Income Tax - NI - Deductions ( Child Care
Vouchers, Salary Sacrifice, Employee Pension Contribution )