Original post by grumbealeIt amazes me how dumb most people are when calculating tax. The thresholds are all online.
Everyone gets a £10,000 personal allowance. You are then taxed as follows.
Basic rate: 20% (£0-31,865)
Higher Rate: 40% (£31,865+)
So if you earn £50k, gross, it calculates as follows:
£50,000 Gross
-£10,000 Personal Allowance
= £40,000 Taxable.
£40000 - £31865 = £8135 Taxable @ 40% = £3254
£31865 Taxable @ 20% = £6373
Total Deductions From Tax = £9627
National Insurance
National Insurance is calculated as follows,
you pay 12% on earnings between £153-805/per week, and 2% above that.
In the case of £50,000/year (961.54 per week), you'd pay:
(£805-£153) * 0.12 = £78.24/week - this is as you're already earning above the threshold.
([£50000/52] - 805) * .02 = £3.13/week earnings above the £805 threshold.
= £81.37 per week = £4231.24/year
In total, your deductions are £13858.28/year, therefore meaning your net salary would be £36141.72, and therefore your monthly, take home pay would be £3011.81
In effect, you lose 27.7% of your salary.
The more you earn the more you lose as a percentage, but if your gross salary increases your net salary will always increase.