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UK Tax & NI Calculator 2015 - 2016

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2015 - 2016 income tax and NI calculator UK

Welcome to iknowtax.com where you will find Tax and NI calculators containing the latest official rates from the HMRC. It allows you to calculate your net income after tax and see what the taxman is taking. You will find links to the Tax and NI calculators and an easy to understand table showing the tax rates for 2014 - 2015 and the previous years.

National minimum wage rates per hour from October 2015:

  • 6.70 for 21 years and older
  • 5.30 for 18 - 20 years old
  • 3.87 for under 18 years old
  • 3.30 for apprentice

How is tax calculated? I'm confused

You have come to the right place! This is the first stop for you to understand about tax rates and how it is calculated. You can learn from scratch here. After reading this page you can then search and ask specific questions on Google about tax. You will know what you're doing!
Understanding and calculating tax can be quite complicated so this website will lift you off the ground and get you knowing.

Your tax is calculated after deducting your Personal Allowance. Everyone gets Personal Allowance unless you are earning over 100,000 (which your personal allowance starts to deduct bit by bit until it reaches zero).
Your tax is calculated on your salary (or earning) left after taking away your Personal Allowance amount from your salary (Personal Allowance is the amount of your salary where tax is not applied, making anything in that amount a tax free income) (Don't get confused; personal allowance doesn't mean that you get this amount as extra money coming to you, it is the part of your income (salary/earning) where the tax does not apply, is called Personal Allowance).
Example, your salary is 30,000 per annum, your Personal Allowance is 10,600 per year; so 30,000 - 10,600 = 19,400. So on 19,400 is amount where the tax will be taken from as a percentage (detailed examples below). Still, more is deducted for your National Insurance Contribution (NIC) if you have not reached the state pension age. The amount for National Insurance is deducted as a percentage on salary above 155 per week (8060 per year). Look at the tables below.

It's a myth: It is sometimes better to not earn more, by getting a higher paid job or a second job because you will lose out by paying more tax

Personal Allowance 2015 - 2016

What is Personal Allowance? Personal Allowance is the portion of your earning where tax is not applied, making that portion of your earning tax free.

Age Condition Personal Allowance (per year)
Under 67 If you are earning up to 100,000 10,600
If you are earning between 100,000 and 121,200 Decreases from 10,600 by 50% of every pound you earn (above 100,000) until it reaches 0
If you are earning 121,200 or more 0
67 - 77 If you are earning up to 100,000 10,600
If you are earning between 100,000 and 121,200 Decreases from 10,600 by 50% of every pound you earn (above 100,000) until it reaches 0
If you are earning 121,200 or more 0
78 and over If you are earning up to 27,700 10,660
If you are earning between 27,700 and 27,820 Decreases from 10,660 by 50% of every pound you earn (above 27,700) until it reaches 10,600
If you are earning from 27,820 to 100,000 10,600
If you are earning between 100,000 and 121,200 Decreases from 10,600 by 50% of every pound you earn (above 100,000) until it reaches 0
If you are earning 121,200 or more 0
Blind person receive an additional amount of 2290 on top of the personal allowance

See example #1

Taxable Income/Income Tax

Taxable income is your earning where tax can be applied to.
These are some that counts as taxable income: income from employment, self employment/partnership, pension, investment earning, rental property, state benefits. For more information visit: https://www.gov.uk/income-tax/overview.

Tax Rates 2015 - 2016

These rates apply to different portions of your earning

Your earning [per year after taking away your Personal Allowance amount from your earning] Tax Rate 2015 - 2016 That is
Under your Personal Allowance amount No tax taken 0
0 - 31,785 20% basic rate
31,786 - 150,000 40% higher rate
over 150,000 45% additional rate

Example: Salary minus Personal Allowance: 35,000 - 10,600 = 24,400.
So on 24,400, 20% tax rate will apply as you can see on the table above this amount falls between 0 - 31,785.

Example 2: Salary minus Personal Allowance: 50,000 - 10,600 = 39,400.
On this amount (39,400), 20% will be applied to up to 31,785 and on the remaining amount it will be 40%.
Like this: 20% of 31,785 (out of 39,400), and 40% of 7615 (remaining of 39,400 minus 31,785). So the tax paid will be 9403. See the illustration below.

Image below illustrates the portion of the salary (50,000) where the tax rates are applied and deducted
2014 - 2015 tax example graph illustration

See example #4 | Does Tax or NI come out first?

National Insurance Rates 2015/2016

National Insurance Contribution is payable by everyone, until you have reached the state retirement age. National Insurance pays for your state pension and other state benefits.

These rates apply to different portions of your earning

Your Earning [Per year] National Insurance Rate That is
Earnings up to 8060 0% No National Insurance contribution is payable
Earnings between 8060 and 42,380 12% Salary minus 8060 = X, 12% of X
Earnings 42,380 or more 2% 42,380 minus 8060 = 34,320, 12% of 34,320 plus salary minus 42,380 = X, 2% of X

Below the above table is presented in a different way (it makes it a little easier to see how to apply NI rates on your earning) :

Your Earning [Per year, after subtracting 8060] National Insurance Rate That is
Below 0 0% No National Insurance contribution is payable
Between 0 and 34,320 12% Salary minus 8060 = X, 12% of X
Between 34,320 or more 2% 42,380 minus 8060 = 34,320, 12% of 34,320 plus salary minus 42,380 = X, 2% of

How to calculate tax?

Here are examples of how Tax and NI is calculated, so you can work out your take home/net pay:

NOTE: These example are shown using 2014 rates. This section will be updated this week to show examples with 2015 tax rates.

#01 If I earn 5000 per year, how is tax and NI calculated:
You are under 65 years so you will have personal allowance of 10000.
Because your salary is below the Personal Allowance amount, you will not pay tax:
Salary minus Personal Allowance; 5000 - 10000 = below 0, so there is no amount left to tax on.
You will also not pay any National Insurance contribution because you are earning below 7956.
So you keep exactly 5000.

#02 If I earn 15,000 per year, how is tax and NI calculated:
You are under 65 years old so your personal allowance is 10000.
Now to calculate how much tax is due from you, you need to take away Personal Allowance amount from your salary (Salary minus Personal Allowance): 15,000 - 10000 = 5000
So 5000 is the amount where tax will be taken from.
The tax rate will be for you is 20% of 5000.
So 20% of 5000 is 1000 (5000 0.2 = 1000). So the tax due is 1000.
Now to see how much money is left for you to take home, you need to also calculate the amount of National Insurance contribution will be taken from you.
Your salary is more than 7956 and less than 41,860 so the National Insurance rate will be 12%.
Any amount below 7956 you don't need to pay National Insurance.
So to apply the 12% rate you will need to deduct 7956 from your earning.
That will be 15,000 - 7956 = 7044. 7044 is the mount where the 12% will be applied to deduct the amount for NI. So 12% of 7044 is 845.28 (7044 0.12 = 845.28).
Now you can work out how much you take home/ your net pay: Salary - Tax - NIC:
15000 - 1000 - 845.28 = 13,154.72

Is NI deducted after taking out tax? NI is not deducted after your tax, or vice versa. -NI is not calculated and deducted on your earning remaining after the tax deductions. The NI calculations are applied to your full amount of your salary.

#03 If I earn 20000 per year, how is tax and NI calculated:
You are under 65 years old so you personal allowance will be 10000.
Subtract your Personal Allowance amount from 20000.
20,000 - 10,000 = 10,000
Now on 10,000 is where the tax will be deducted from. 20% tax rate will apply.
20% of 10000 is 2000. 2000 is deducted for tax.
For National Insurance (NI); Subtract 7956 from 20,000.
That equals to 12,044. On this amount 12% will be deducted for NI.
12% of 12,044 is 1445.28. For NI 1445.28 is deducted.
Total deduction is 2000 + 1445.28 = 3445.28.
You take home 16,554.72

#04 If I earn 60,000 per year, how is tax and NI calculated:
You are under 65 years old so your personal allowance is 10000.
Tax rate of 20% and 40% will apply. See the Tax Rates table above
To calculate how much tax is due from you, you need to take away your Personal Allowance amount from your salary: (Salary minus Personal Allowance); 60,000 - 10,000 = 50,000.
50,000 is the amount where tax will be applied to.
Now 20% tax rate is applied to 31,865 out of 50,000. See the Tax Rates table above.
So 20% of 31,865 is 6373 (31,865 0.2 = 6373).
Now 40% tax rate is applied to the amount over 31,865 (of 50,000), that is 18,135 (50,000 - 31,865 = 18,135).
So 40% of 18,135 is 7254 (18135 0.4 = 7254).
Total tax due is 13,627 (6373 + 7254).
For National Insurance contribution, 12% rate is applied to salary between 7956 and 41,860 and the 2% rate is applied to amount of the salary above 41,860.
Earning below 7956 you don't pay National Insurance contribution.
So the the 12% rate will apply to amount between 7956 and 41,860 of your earning. And 2% above 41,860.
Amount between 7956 and 41,860 is 33,904 (41,860 - 7956).
On 33,904 12% is deducted. 12% of 33,904 is 4068.48 (33,904 0.12).
The 2% rate applies to your earning from 41,860 to 60,000. Which is 18,140 (60,000 - 41,860).
2% of 18,140 = 362.80 (18,140 0.02).
For National insurance contribution; 4431.28 (4068.48 + 362.80) is deducted from your earning.
Finally you can work out how much you take home: [Salary] - [Tax] - [NIC]:
60,000 - 13,627 - 4431.28 = 41,941.72

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Comments

Newest | Oldest   Helpful   Positive | Critical
1 2 3 > [last]
BIMAL KUMAR ARORAymous says...
Well Done. I Wanttoknow what is national insurace and what is its benefit.An indian who is not resident of UK work for two years and come back india can he claim back national insurance paid
13th May 2016 2:50pm
Dillanger says...
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22nd April 2016 6:35am
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22nd April 2016 6:27am
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22nd April 2016 6:14am
Rochi says...
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22nd April 2016 5:59am
Elyza says...
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22nd April 2016 5:36am
Genevieve says...
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22nd April 2016 5:35am
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22nd April 2016 5:29am
Chaas says...
Thanks for writing such an eadreto-uns-ystand article on this topic.
22nd April 2016 5:28am
Patch says...
Good job maikng it appear easy.
22nd April 2016 5:22am
1 2 3 > [last]
Page 1 of 27  (270 comments)

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Disclaimer: I am not a tax professional, so please do not use this information to make any big decisions. Do consult a professional when making any big decisions.

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i know tax calculator web logo 2011

Learn and teach yourself how the PAYE Tax and National Insurance (NI) is applied to your salary.

UK Tax year 06 April 2015 to 05 April 2016.

Kashem Shah