Net Salary In Uk

Being new to earning money, you may have a lot of questions and worries about your salary. After all, it is your hard earned money you are talking about. You might be wondering many things like if you will get the right salary on time? Are you getting the lowest salary among your peers? are the perks healthy? For most of the people, these things matter and it is really important to know the answers before making a step ahead.

Figures released by the Office of National Statistics (ONS) on 09 January showed that the average full-time salary in Britain was £26,000 in the three months to November 2015. This represents an increase of 1.5% from the same period of 2014. The median UK full-time gross annual pay figure is £21,550, according to data gathered by XpertHR last year.

Net Salary In Uk

Our simple salary calculator gives an estimate of your take-home pay after your employer has made deductions from your gross salary. These include income tax as well as National Insurance payments. The UK’s income tax and National Insurance rates for the current year are set out in the tables below.

Income Tax

income tax is paid on your personal earnings. The system is based on marginal tax rates, with your total tax payment calculated as a percentage of your income within certain thresholds. Therefore, you will not be taxed at a single, flat rate on everything that you earn. For starters, everyone is entitled to earn a set amount of income tax-free. This is known as your personal allowance, which works out to £12,570 for the 2022/2023 tax year. After this, you will pay 20% on any of your earnings between £12,571 and £50,270, and 40% on your income between £50,271 and £150,000. Anything you earn above £150,000 is taxed at 45%.
For every £2 you earn over £100,000, your tax-free personal allowance decreases by £1. This means that as you earn more beyond that figure, more of your total income is taxed.
The tax rates listed above apply to England, Wales, and Northern Ireland. The tax brackets and the rates applicable in Scotland are slightly different, and are listed in the table below.

National Insurance (NI)

anyone who earns above a certain amount must pay National Insurance (NI) in addition to income tax. This is a mandatory contribution that entitles you to certain state benefits including the State Pension and Jobseeker’s Allowance. Employees usually pay Class 1 NI contributions while self-employed people must pay Class 2 contributions. As with income tax, you’ll only pay a higher rate of NI on income over a certain threshold — rather than paying the top band on all your earnings.

Student Loan Repayments

in the UK, students are required to contribute towards their student loan debt once they start earning over a certain threshold. You’ll have to make Plan 1 loan repayments if your course started before 1 September 2012 or if your loan is from the Scottish or Northern Irish student finance agencies. Plan 2 repayments apply to anyone whose course started after 1 September 2012 in England or Wales.

UK Tax Rates for 2022 – 2023

UK Income Tax (excl. Scotland)
Tax BandTax RateTaxable Income
Personal Allowance0%Up to £12,570
Basic Rate20%£12,571 to £50,270
Higher Rate40%£50,271 to £150,000
Additional Rate45%£150,001 or more
Scotland Income Tax
Tax BandTax RateTaxable Income
Personal Allowance0%Up to £12,570
Starter Rate19%£12,571 to £14,732
Basic Rate20%£14,733 to £25,688
Intermediate Rate21%£25,689 to £43,662
Higher Rate41%£43,663 to £150,000
Top Rate46%£150,001 or more
National Insurance (Class 1 — for Employees Only)
How Much You EarnHow Much You’ll Pay
Less than £9,8760%
£9,876 to £50,26813.25%
More than £50,2683.25%
Student Loan Repayments
Student Finance PlanRepayment Rates
Plan 1 (Course started before 1 September 2012 or loan from Northern Irish or Scottish student loan agency)9% of pre-tax earnings over £20,195 per year
Plan 2 (Course started after 1 September 2012 in England or Wales)9% of pre-tax earnings over £27,295 per year

The tax rates above apply to UK employees and do not pertain to self-employed taxpayers.

How to Manage Your Tax in the UK

Your employment status will influence the way in which you need to handle your tax payments. The categories below are the most common ways that income tax is collected in the UK.

UK self-assessment tax returns must be submitted by 31 January each year, and can be completed online using the Government Gateway or on paper by completing form SA100.

PAYE Tax

Most UK employees pay tax through the Pay As You Earn (PAYE) system. This means that your employer will deduct income tax, National Insurance and student loan payments directly from your total pay before it reaches your bank account. Taxpayers whose tax is collected from PAYE will not usually need to file a tax return unless they have another source of income or earn over £100,000.

UK Self-Assessment Tax Returns

if you’re self-employed or have earned over £100,000, you’ll usually need to complete an annual self-assessment tax return. Returns are usually due in January, and can be quite complex — often requiring the assistance of an accountant to complete.
To submit a tax return to HMRC, you’ll need to register online or complete a paper copy. UK self-assessment tax returns should provide details of all income, benefits, pension contributions, allowances, and even charitable donations. Once your self-assessment tax return has been completed and approved by HMRC, you will typically need to pay in two stages that fall in January and July of each year.

How to Pay Less Tax in the UK

Thousands of people are paying too much tax in the UK. By claiming tax credits, free childcare, and putting money away for retirement, you could save hundreds or even thousands of pounds on tax each year.

Working Tax Credit alone could save eligible claimants up to £2,005 per tax year. These savings could increase dramatically if you can claim Child Tax Credit, or if you can structure your earnings to pay less using the Married Couple’s Allowance which could help you to save a further £250.

You can even save money on UK income tax by preparing for the future. Saving for retirement is one of the easiest ways to reduce your taxable income, and basic rate taxpayers can even earn up to £1,000 of interest on their savings without needing to pay another penny.

To find out more about how you can save on your UK tax bill, read our full guide here.

What is the Average UK Income?

The median monthly household income in the United Kingdom is £2,491, before deductions such as income tax and National Insurance payments have been made. This equates to an annual salary of £29,900 annually — although it should be noted that this figure represents the income of a household, not an individual. Half of the population earns less than this figure, and only those people who are required to pay income tax are included in the statistics.

The majority of taxpayers get an annual salary, pro-rated over the course of the working year. Those aged 23 and over should earn the National Minimum Wage of at least £8.91 per hour regardless of how they’re paid. Full-time employees generally work for 35 hours or more each week. A full-time worker on minimum wage could therefore expect to earn at least £311.85 per week, £1,351.35 per month, or £16,216.20 per year before tax and other deductions.

The above figures place the UK in 9th place in the International Labour Organisation’s 2018 ranking of minimum wage rates by country.

The UK is home to people of many nationalities and the capital city, London, is particularly diverse. It is often recognised as one of the best cities in the world, but it’s also one of the most expensive. London ranked 19th in the top most expensive cities worldwide according to the Mercer 2020 Cost of Living Survey — but many other parts of the country are significantly cheaper.

With low unemployment rates and a huge variety of active business sectors, residents of the UK benefit from strong career opportunities and an internationally renowned social security system.

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