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UK Tax & NI Calculator 2017 - 2018

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2017 - 2018 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 2017 - 2018 and the previous years.

National living wage rates per hour from March 2017:

  • 7.50 for 25 years and older
  • 7.05for 21 - 24 years old
  • 5.60 for 18 - 20 years old
  • 4.05 for under 18 years old
  • 3.50 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 11,500 per year; so 30,000 - 11,500 = 18,500. So on 19,500 is the 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 157 per week (680.21 per month / 8164 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

🤔Also it is not true that student do not get taxed. Students do get taxed like everyone else once their earning has gone above the tax free personal allowanace and tax free NI thresholds. As students usually work part-time they earn less which is usually below the personal allowance amount which is tax free thinking they dont get taxed. When they earn more during holidays by working more hours their pay goes above the tax free threshold and get taxed.

Personal Allowance 2017 - 2018

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.

Earning Personal Allowance (per year)
If you are earning up to 100,000 11,500
If you are earning between 100,000 and 123,000 Decreases from 11,000 by 50% of every pound you earn (above 100,000) until it reaches 0
If you are earning 123,000 or more 0
Blind person receive an additional amount of 2320 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 2017 - 2018

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 2016 - 2017 That is
Under your Personal Allowance amount No tax taken 0
0 - 33,500 20% Basic rate
33,501 - 150,000 40% Higher rate
over 150,000 45% Additional rate

Example: Salary minus Personal Allowance: 35,000 - 11,500 = 23,500.
So on 23,500, 20% tax rate will apply as you can see on the table above this amount falls between 0 - 33,500.

Example 2: Salary minus Personal Allowance: 50,000 - 11,500 = 38,500.
On this amount (38,500), 20% will be applied to up to 33,500 and on the remaining amount it will be 40%.
Like this: 20% of 33,500 (out of 38,500), and 40% of 5000 (remaining of 38,500 minus 33,500). So the tax paid will be 8700. See the illustration below.

Image below illustrates the portion of the salary (50,000) where the tax rates are applied and deducted
2016 - 2017 tax example graph illustration

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

National Insurance Rates 2017/2018

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 8164 0% No National Insurance contribution is payable
Earnings between 8164 and 45,032 12% Salary minus 8164 = X, 12% of X
Earnings 45,032 or more 2% 45,032 minus 8164 = 34,944, 12% of 34,944 plus salary minus 45,032 = 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 8164] National Insurance Rate That is
Below 0 0% No National Insurance contribution is payable
Between 0 and 36,868 12% Salary minus 8164 = X, 12% of X
Between 36,868 or more 2% 45,032 minus 8164 = 34,944, 12% of 34,944 plus salary minus 45,032 = X, 2% of X

How to calculate tax?

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

Examples contains 2016/2017 tax rates. 2017/2018 rates example update to be done by end of April

#01 If I earn 6000 per year, how is tax and NI calculated:
You have personal allowance of 11000.
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 8060.
So you keep exactly 5000.

#02 If I earn 15,000 per year, how is tax and NI calculated:
You have personal allowance of 11000.
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 - 11000 = 4000
So 4000 is the amount where tax will be taken from.
The tax rate will be for you is 20%.
So 20% of 4000 is 800 (4000 0.2 = 800). So the tax due is 800.
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 8060 and less than 43,004 so the National Insurance rate will be 12%.
Any amount below 8060 you don't need to pay National Insurance.
So to apply the 12% rate you will need to deduct 8060 from your earning.
That will be 15,000 - 8060 = 6940. 6940 is the mount where the 12% will be applied to deduct the amount for NI. So 12% of 6940 is 832.80 (6940 0.12 = 832.80).
Now you can work out how much you take home/ your net pay: Salary - Tax - NIC:
15000 - 800 - 832.80 = 13,367.20

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 25000 per year, how is tax and NI calculated:
Your personal allowance is 11000.
Subtract your Personal Allowance amount from 25,000.
25,000 - 11,000 = 14,000
Now on 14,000 is where the tax will be deducted from. 20% tax rate will apply.
20% of 14000 is 2800. 2800 is deducted for tax.
For National Insurance (NI); Subtract 8060 from 25,000.
That equals to 16,940. On this amount 12% will be deducted for NI.
12% of 16,940 is 2038.80. For NI 2038.80 is deducted.
Total deduction is 2800 + 2038.80 = 4832.80.
You take home 20,167.20

#04 If I earn 60,000 per year, how is tax and NI calculated:
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 - 11,000 = 49,000.
49,000 is the amount where tax will be applied to.
Now 20% tax rate is applied to 32,000 out of 49,000. See the Tax Rates table above.
So 20% of 32,000 is 6400 (32,000 0.2 = 6400).
Now 40% tax rate is applied to the amount over 32,000 (of 49,000), that is 17,000 (49,000 - 32,000 = 17,000).
So 40% of 17,000 is 6800 (17000 0.4 = 6800).
Total tax due is 13,200 (6400 + 6800).
For National Insurance contribution, 12% rate is applied to salary between 8060 and 43,004 and the 2% rate is applied to amount of the salary above 43,004.
Earning below 8060 you don't pay National Insurance contribution.
So the the 12% rate will apply to amount between 8060 and 43,004 of your earning. And 2% above 43,004.
Amount between 8060 and 43,004 is 34,944 (43,004 - 8060).
On 34,944 12% is deducted. 12% of 34,944 is 4193.28 (34,944 0.12).
The 2% rate applies to your earning from 43,004 to 60,000. Which is 16,996 (60,000 - 43,004).
2% of 16,996 = 339.92 (16,996 0.02).
For National insurance contribution; 4533.20 (4193.28 + 339.92) is deducted from your earning.
Finally you can work out how much you take home: [Salary] - [Tax] - [NIC]:
60,000 - 13,200 - 4533.20 = 42,266.8

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Comments

Newest | Oldest   Helpful   Positive | Critical
tina says...
thank you so much for making your information and tax/ni calculator freely available. it's been really helpful. much appreciated.
6th August 2011 3:55pm
Tracy says...
Adam I think you'll find they pay the same, PLUS 2% so not paying less
27th July 2011 4:58pm
CAROL says...
SO EASY TO FOLLOW HELPED ME ALOT
26th July 2011 4:47pm
adam smith says...
why does someone earning over 42k pay 10%less NI than me ????? very confused
21st July 2011 4:49pm
danuta says...
at last i've found proper info, thanks
19th July 2011 11:35pm
Tracy says...
I thought there was a little difference in mine, and on checking I have a company car...duh, so yes it would be slightly different.
17th July 2011 11:12pm
Tracy says...
This is great, especially now I am looking for a new job. People were telling me that if I earnt more than 40000, I would only take home 20000.....It's wasnice to see I actually knew more than them.
THANKS x
17th July 2011 10:41pm
Pamela says...
GREAT CALCULATOR ON HERE WHICH HAS HELPED US A LOT. THANK YOU!
15th July 2011 7:44pm
me and my hubby! says...
My Husbands boss pays the wages late and also keeps some back from it every week so as to round the amount up but I always thought that it was about 7-50 a week that he was holding back but I found your tax calculator online last night and realised that up to april 2011 he has been holding back 21 each week that multiplied by 52 weeks amounts to 1092 per year and with the new tax allowance from april this year it will be 23.43 that he is holding back a week, which will be 1218.36 for 2011.
We havent been able to work this out before as hughie has had no wage slips for 2 years or any P60 for last year or this year.
What makes us so mad is that he is being taxed on the full amount but not getting it!

About twice a year we ask for the outstanding money and it takes him about 6 weeks to get round to giving it to us and then we get about 200 or 250 each time and nothing like a thousand a year.

What should we do as he doesnt want to lost his job and every time he asks his boss for the wage slips and P60 and tells him that he is breaking the law by not giving then to him, he just says I know, I know! and does nothing about it!

Also hughie never ever got a contract which you are supposed to get within 13 weeks of starting employment I believe. My Husband used to ask for this but never ever got it.He has worked for him approx 4 years now!

He also worked a week in hand but when he pays the wages late he says things like the weeks not out yet and pays when he likes the following week but he reminds him that he has already worked a week in hand anyway. he has been paying by the following monday lately but it used to be the following wednesday and whilst he is on holiday at the moment he has arranged with the bank to pay it each saturday.
Why cant he do this every week!!!
I cant see that if he ever left his job that he would get that week in hand back! Any suggestions anyone?
15th July 2011 6:34pm
Amen says...
Excellent piece of info. keep it up.
15th July 2011 12:51pm
Page 31 of 35  (348 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 2017 to 05 April 2018.

Kashem Shah