Take Home Pay / Salary Calculator UK 2024

This take home pay calculator allows you to customize values for an accurate breakdown. Updated August 2024.

How to Use

Overview of Contents:

Personal Allowance

The Personal Allowance is the amount you can earn annually without incurring Income Tax. This allowance can be applied to various sources of income, including your salary, interest earned from savings, dividends, and more.

For the 2024/25 tax year, the Personal Allowance stands at £12,570. Typically, if your total income is below this threshold, you won’t owe any Income Tax.

There are circumstances that might alter your Personal Allowance. For instance, you could be eligible for additional benefits such as the Marriage Allowance or Blind Person’s Allowance, which might increase your allowance. Conversely, if you are a high earner or have outstanding tax debts from previous years, your allowance might be reduced. You can determine your Personal Allowance using your tax code or by visiting GOV.UK.

If your income exceeds £100,000, the Personal Allowance decreases by £1 for every £2 you earn above this amount. Therefore, if your income reaches £125,140 or more, you will have used up your entire allowance, meaning all of your income will be taxable.

Tax Code

Your tax code is a series of numbers and letters assigned by HMRC (Her Majesty’s Revenue and Customs) to indicate the amount of Income Tax your employer or pension provider should deduct from your earnings.

You can check your current tax code online to ensure it’s correct. Tax codes that start with “S” indicate Scottish tax rates, while codes starting with “C” reflect Welsh rates, which are similar to those in England.

The numeric part of your tax code represents your Personal Allowance divided by 10. For example, the tax code “1257L” means your Personal Allowance is £12,570.

Here are some common tax codes and their meanings:

• L: Standard Personal Allowance
• M: Marriage Allowance – you’ve received 10% of your partner’s Personal Allowance
• N: Marriage Allowance – you’ve transferred 10% of your Personal Allowance to your partner
• T: Your tax code includes other calculations, such as reductions in your Personal Allowance
• K: Your untaxed income exceeds your tax-free allowance
• 0T: No Personal Allowance or no tax code available
• BR: All income taxed at the basic rate
• D0: All income taxed at the higher rate
• D1: All income taxed at the additional rate
• NT: No tax on this income

If your tax code includes “W1,” “M1,” or “X,” it’s an emergency tax code, which means it’s temporary and should not be used for long-term tax calculations.

For tax codes like BR, D0, D1, D2, or NT, your dividends and savings interest will be taxed according to standard tax bands, and your Personal Allowance will be assumed to be £0.

Income Tax

Income tax is calculated based on tax bands, which are set by the government and can vary year to year. These bands determine the rate of tax you pay on different portions of your income.

Your taxable income includes salary, interest, and dividends, and the tax bands apply as follows for residents of England, Wales, and Northern Ireland (assuming a standard tax code of 1257L):

If you reside in Scotland, income tax bands differ:

Savings and dividends for Scottish residents are taxed at the same rates as in the rest of the UK.

Interest Income

Interest earned on savings is subject to Income Tax but not National Insurance. You can use your Personal Allowance to offset interest income, though your salary will be prioritized in using this allowance.

• Starting Rate for Savings: You can earn up to £5,000 in interest without paying tax, depending on your other income. If your income (excluding savings) is £17,570 or more, you won’t qualify for this starting rate.
• Personal Savings Allowance: This allows you to earn up to £1,000 in interest tax-free if you are a basic rate taxpayer. Higher rate taxpayers can earn up to £500 tax-free, while additional rate taxpayers do not receive a savings allowance.

Student Loan Repayment

Your student loan repayment plan depends on when you began your course and your location at that time. Here’s a breakdown:

For example, if you started a postgraduate course after September 2012, you fall under Plan PG. If you are repaying more than one type of loan, you’ll pay the higher percentage across all loans above the respective thresholds.

Pension Contributions

Pension contributions can differ based on the type of pension scheme:

• Auto-Enrolment: Contributions apply to earnings between £6,240 and £50,270, including bonuses and overtime. These are not subject to Income Tax but are liable for National Insurance.
• Employer Pensions: Contributions depend on whether your employer uses your gross salary or qualifying earnings as a base, and they may include bonuses and overtime. These are not taxed but are subject to National Insurance.
• Salary Sacrifice: Contributions are made from your gross salary before tax and National Insurance, reducing your taxable income and the amount of student loan repayments.
• Personal Pensions: Contributions are based on gross salary or qualifying earnings and are subject to National Insurance and tax, though your pension provider can reclaim 20% tax from HMRC on your contributions. Higher or additional rate taxpayers can reclaim further tax relief.

Bonus

Bonuses are taxed just like your regular earnings, with tax and National Insurance deducted at the same rates. Large bonuses may push you into a higher tax band, leading to a higher rate of tax for that month.

Overtime Earnings

Overtime is taxed at the same rate as your regular income, with no special allowances. The more you earn, the more tax you will pay on those earnings.

Salary Sacrifice

In a salary sacrifice arrangement, you agree to give up a portion of your salary in exchange for non-cash benefits. Since April 2017, most salary sacrifice benefits no longer offer income tax savings, though National Insurance savings may still apply.

Taxable Benefits

Taxable benefits, like a company car or private healthcare, are perks provided by your employer that are subject to tax but exempt from National Insurance. If your tax code accounts for these benefits, you do not need to list them separately in your tax return.

Other Income

If you receive additional income, such as dividends, they are taxed at the following rates:

Gift Aid

Donations made through Gift Aid allow charities to reclaim an extra 25p for every £1 you donate, which doesn’t come out of your pocket. Higher-rate taxpayers can claim additional tax relief on these donations.

National Insurance Contributions (NIC) Letters

Different categories of employees have different National Insurance rates. Here’s a quick guide:

Different thresholds apply depending on the employee category and salary level.