Income Tax Calculator

What is Income Tax?

Income Tax is a tax that is payable on earnings that are generated in the UK.

It is payable if you earn over the annual tax-free threshold which is £12,570 for the 2023/24 tax year. This earnings threshold is known as the Personal Allowance.

Click here (2023/24 tax year): HMRC Income Tax Calculator

How is Income Tax calculated?

If you are an employee, then your Income Tax is likely to have been deducted automatically by your employer based on your salary. Your employer will also automatically deduct your national insurance contributions.

Provided your tax code is accurate, most of the time you shouldn’t have to make any additional tax payments.

However you may be eligible for a tax refund or may need to make an additional tax payment if:

  • You change jobs
  • You earn over £125,000
  • You earn additional income from other sources other than your employment (e.g. interest income and capital gains income)
  • You do things that qualify for tax relief (e.g. make pension payments, give to charity, etc)

How is Income Tax calculated?

Income Tax is calculated based on how much you earn. The Income Tax rates are set by the government. If they change, this usually happens in the Spring or Autumn budget.

The Income Tax thresholds were recently changed by the Government, but the tax rates remain the same. For the 2023/24 tax year, the rates are in the table below:

Income

Tax rate

Up to £12,570

0%

Personal allowance

£12,571 to £50,270

20%

Basic rate

£50,271 to £125,140

40%

Higher rate

over £125,141

45%

Additional rate

 

    Income Tax Example

    It’s important to remember when calculating your taxes that the rates only apply to a portion of your income and not the whole amount.

    For example, if you earn £75,000 a year, you’re not taxed 40% of this full amount.

    Your Income Tax breakdown:

    • You pay no income tax on first £12,570 (this is your Personal Allowance)
    • You pay £7,540 at basic income tax rate (20%) on the next £37,700
    • You pay £9,892 at basic income tax rate (20%) on the next £24,730

    Your National Insurance contributions breakdown:

    • You pay no contributions on the first £11,908 that you make
    • You pay £4,883 of contributions (at 12.73%) on the next £38,362 that you make
    • You pay £675 of contributions (at 2.73%) on the next £19,730 that you make

    The total tax to pay is £22,990, which is the sum of your Income Tax payable of £17,432 and your national insurance contributions of £5,558.

    Back to Tax Calculators

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