UK Tax Calculator
Understanding how Income Tax works in the UK can initially seem confusing. 123Financials' Income Tax Calculator for UK taxpayers is an easy-to-use online tool that allows you to calculate Income Tax and National Insurance (NI) for the current financial year. It will help you estimate whether you are being paid the right salary and budget your income. We have updated our salary tax calculator based on the HMRC changes.
Who should use our Income Tax calculator?
Almost all incomes are taxable. The most common taxable income is the salary and wages you earn. However, you may also need to pay Income Tax on the following incomes:
- Rent from your tenants
- Interest and Dividends from investments and savings
- Business profits
Income tax is charged into different bands. As your income increases, so does your income tax.
Your taxable income is reduced by any allowances you qualify for, like personal allowance.
What is Personal Allowance in the context of income tax?
An allowance is an amount of income you earn without paying any income tax. Personal allowance is the most common type of allowance to which every individual, including students, is entitled. The exact amount for personal allowance varies with each year. For the current financial year 2023-24, the Personal Allowance is £12,570.
In addition to Personal Allowance, there is Marriage Allowance, Child Allowance, and Blind Person's Allowance available to you based on your circumstances.
How is income tax calculated in the UK?
UK chancellor usually sets the income tax rates during the Spring and Autumn Budget. This year, the Income Tax rates are:
|Income||Income tax band||Income tax band name|
|Up to £12,570||0%||Personal allowance|
|£12,571 to £50,270||20%||Basic rate|
|£50,271 to £125,140||40%||Higher rate|
|Above £125,141||45%||Additional rate|
You don't pay income tax at the same rate on all taxable income. For instance, if you earned £70,000 in 2023-24, your income tax will be calculated as:
First £12, 570 = No tax
£37,700 (£50,270 - £12, 571) = 20% Tax Rate
£19,730 (£70,000 - £50,270) = 40% Tax Rate
You will get a clearer picture when you use the 123 Financials' Tax Calculator for UK taxpayers.
What is 123 Financials' Income Tax Calculator?
123Financials' UK tax calculator is a simple tool for estimating how much tax you owe. It helps you see how much money you can keep and how much you need to pay in taxes.
Our tax return calculators give you answers for different situations. For example, you can use them to decide whether it's better to start a company or work on your own, compare being a sole trader to being an employee, check what will be your take-home pay when switching jobs, and understand the National Insurance contributions for both employers and employees.
Our self-employed tax calculator tool can help you budget your taxes accordingly if you are self-employed. You may be able to claim a refund if you have exceeded your tax deductions.
If you are a startup founder or finance professional tasked with preparing business forecasts and budgets, use our Employer NI calculator to estimate Employer NIC.