UK Income Tax Rules
The I-resign.com salary calculator is based upon the following rules as laid out by the government (Inland Revenue Service) at the last budget statement, given on 21 March 2007. These rules are valid until the next budget. The salary calculator assumes that you are a regular employee, and not a company director or self-employed and is only valid for the United Kingdom.
National Insurance Contributions
National Insurance contributions for employees are calculated on your pay per week. The bands are shown below.
| Pay Per Week | National Insurance Rate |
| First £87 | NIL |
| Salary over £87 and under £670 | 11% |
| Salary over £670 | 1% |
- Example 1: If you earn less than £87 per week,
you pay no NI contributions
- Example 2: If you earn £340 per week, you will
pay 11% of the difference between £340 and £87, £243.
Which means that you will pay £26.73 per week
- Example 3: If you earn £850 per week you will pay £64.13 plus 1% of the £185, total of £65.98.
Allowance
| ALLOWANCE | AMOUNT |
| Personal | |
| - Basic | £5,225 |
| - Age 65-75 | £7,550 |
| - Age 75 and over | £7,690 |
| Blind Personal | £1,730 |
| Married Couple's
This allowance has been abolished. The Over 65 rate will apply to those whose 65th birthday was before 6th April 2000. |
|
| - Age 65-75 | £6,285 |
| - Age 75 and over |
£6,365 |
Your Allowance is the amount of money you are allowed to earn without paying income tax.
Your Personal Allowance depends on your age. For example, if you are under 65 and earn £28,400 per annum your allowance is £5,225. This means you have to pay income tax on £23,175. If you are also blind, you will only pay income tax on £21,445.
If you are married, and you turned 65 before 6th April 2000 you and your spouse receive a Married Couple's Allowance. This is a payment given back to you after your income tax has been deducted. The amount returned is equal to the maximum allowance at 10%, so essentially £628. If you said you were married, the Tax Calculator has factored this figure into your net pay.
Income Tax Rates
| TAX RATE | INCOME RANGE AFFECTED |
| 10% | £0-£2,230 of taxable income |
| 22% | £2,231-£34,600 |
| 40% | £34,601 and above |
There are three bands of income tax. Your taxable income is the amount you earn minus your personal allowance (see above).
- The first £2,150 of your taxable income is taxed
at 10%.
- The next £31,149 is taxed at 22%.
- Any further earnings are taxed at 40%.
Tax Credits
In 2001, tax credits were introduced. The tax calulator supports a simple version of the child tax credit.