How is salary after tax calculated in the UK?

Deductions include Income Tax (20-45%) and National Insurance (8% and 2%). You get a personal allowance of £12,570.

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How Salary After Tax is Calculated in the United Kingdom

In the UK, your take-home pay is calculated by deducting Income Tax and National Insurance from your gross salary. The system is designed to be progressive, meaning higher earners pay a larger percentage of their income in tax.

Personal Allowance

Most employees can earn up to a certain amount (your Personal Allowance) without paying any Income Tax. However, you still pay National Insurance on earnings above a certain threshold.

Income Tax Bands

After your Personal Allowance, you pay basic rate tax, higher rate tax, or additional rate tax depending on your total income level.

National Insurance

National Insurance contributions fund state benefits including the NHS and state pension. The rate you pay depends on your earnings above the threshold.

Tax Year

The UK tax year runs from April 6th to April 5th of the following year. This is different from the calendar year and is important to remember when planning your finances and filing your Self Assessment tax return.