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£25,000 After Tax - UK Tax Calculator
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UK Tax Calculator

after tax will give you a net income of

If you have a gross salary of , then you will pay in income tax and in national insurance. You will be left with a net a year after tax and national insurance.

This means that you will take home per month as a net salary.





Year Month

Your Tax Calculations For Explained

In your case from the tax calculator above, you have a gross income of .
Just like most of the people in the UK, you will have a personal tax allowance of , since your total taxable income is less than £100,000. You pay no tax on this personal allowance.
You will then pay the basic tax rate of 20% on . This is minus your personal allowance of , capped at your higher earnings limit of .
Since you are earning above this limit, you will also pay the higher tax rate of 40% on . This is minus your higher earnings limit of , capped at your additional earnings limit of .
Since you are earning above this limit, you will also pay the additional tax rate of 45% on . This is minus your additional earnings limit of .
Below is your tax breakdown in simplified form:

On the first you earn, you will pay no tax.

On the next the first you earn, you will pay tax (at 20%).

On the next you earn, you will pay tax (at 40%).

Finally, on the next you earn, you will pay tax (at 45%).

Your total tax paid is .

Scroll down below to understand how the UK tax system is working, and to learn how we calculate your taxes and NET, after tax income on your salary.

How Are These Calculations Done?

The UK has a complex tax system. As a result, working out your income tax and other costs can become quite tricky. By using the calculator above, you are able to calculate your income tax, national insurance, income from dividends, student loan repayments and your total net income, all based upon your income.

Remember that this income can come from more than one job. If you have multiple jobs, make sure to add the all of the incomes together.

Here we're going to break down these calculations in order to help you better understand the tax you'll be paying using the above example, in which you are earning per year.

Income Tax
What Is Income Tax?

Income tax is the tax levied onto your personal income. In other words it's the tax you pay on your earnings. You pay income tax on the following:

  • Income from your employment
  • Income from your pension
  • Income from trusts
  • Rental income
  • Employment benefits
  • Interest on savings

It is a legal requirement to pay income tax. If you receive income from any of the above then you must file a self-assessment tax return.

Income Tax Bands

There are 4 tax bands in the UK for the 2019/2020 tax year. The table below shows these bands and the rates at which you pay tax within those bands.

Tax Band Tax Rate
Personal Allowance - For most people this will be the first £12,500 that you earn. However, the personal allowance will decrease by £1 for every £2 over £100,000 you earn in taxable income*. This is your untaxed allowance. Therefore tax in this band is at 0%.
Basic rate - This is the lowest band of taxed income. Earnings between £12,500 and £50,000 fall into this band**. You pay 20% in tax on all earnings in this band.
Higher rate - The next band of taxed income. Earnings between £50,000 and £150,000 fall into this band You pay 40% in tax on all earnings in this band
Additional rate - The highest band of taxed income. Earnings above £150,000 fall into this band You pay 45% in tax on all earnings in this band

*Remember that taxable income includes dividends and any other taxable sources you may have, not just salary. **Bands in this table are calculated assuming the personal allowance is the full £12,500.



National Insurance
What is National Insurance?

National Insurance is a tax on earnings paid by employees and employers. The contributions help to build your entitlement to certain state benefits. Those benefits can include the following:

  • State pension
  • Jobseeker's allowance
  • Employment and support allowance
  • Bereavement support
  • Maternity allowance

The benefits you qualify for will also depend on whether you are self-employed or an employee. To pay national insurance you must be over 16 and have a national insurance number.

National Insurance Bands

The following table shows the rate at which the self-employed will pay national insurance.

Salary Classes 2 and 4 Rates
Less than £6,365 0%
£6,365 - £8,632 £3 per week
£8,632 - £50,000 12%
Over £50,000 2%

And here are the rates for employees:

Salary Class 1 Rate
Less than £8,632 0%
£8,632 - £50,000 12%
Over £50,000 2%

The calculator assumes that you are an employee.

Your National Insurance

So, in this case you have a gross income of .
You won't have to pay national insurance on the first of thatany of that, since you do not earn above the national insurance threshold of £8,632.
You will then pay the primary rate of 12% on . This is minus the primary threshold of £8,632, capped at the secondary threshold of £50,000.
You will then pay the secondary rate of 2% on . This is minus the secondary thresholdof £50,000.
So here is your national insurance breakdown in simplified form:

On the first you earn, you will pay no national insurance.

On the next you earn, you will pay in national insurance (at 12%).

On the next you earn, you will pay in national insurance (at 2%).

So the total you will pay in national insurance is

Dividends
What Are Dividends?

Dividends are payments made by a company to its owners and shareholders. Usually they will be paid in the form of a cheque, but can also be paid in the form of additional shares of stock. This latter form is referred to as dividend reinvestment. Dividends can be a great way to have a regular income from investments. Whichever way your dividends are paid, they are considered a form of taxable income.

Calculating your dividend tax can be quite complicated. In the tax year of 2019/2020 every person has a tax free dividend allowance of £2,000. If your only income comes from your investments, you can also use your income tax free personal allowance of £12,500 before you start paying dividend tax. Once you exceed your personal allowance for dividends, you will pay tax on them depending on which income tax band they fall into.

Dividend Tax Bands

The following table shows how much tax you pay on dividends in each of the tax bands.

Tax Band Dividend Tax Rate
Dividend Personal Allowance 0% (The first £2000 you earn in dividends)
Basic Tax Rate 7.5%
Higher Tax Rate 32.5%
Additional Tax Rate 38.1%
Your Dividend Tax

You currently have not included any dividend payments. Include them on the calculator above to see how the calculations are done here.

So, in this case you have a gross income of and a dividend income of .
Like everyone, you have a dividend personal allowance of £2,000. If your income does not exceed the income tax personal allowance of £12,500 then you can also use the remainder of this allowance for your dividends.
So your total dividend personal allowance is . You pay no dividend tax on this much of your dividends.
You will then pay 7.5% dividend tax on . This is your dividend earnings inside the basic tax band.
Then you pay 32.5% on . This is your dividend earnings inside the higher tax band.
Then, you pay 38.1% on . This is your dividend earnings inside the additional tax band.
So here is your dividend tax breakdown in simplified form:

On the first you earn in dividends, you will pay no tax.

On the next you earn in dividends, you will pay (at 7.5%).

On the next you earn in dividends, you will pay (at 32.5%).

Finally, on the next you earn in dividends, you will pay (at 38.1%).

So in total you will pay in dividend tax.

Student Loan
What Are Student Loans?

Student loans allow you to borrow money in order to pay for tuition fees, accommodation and other living costs. Currently the maximum you can borrow is £9,250 a year for tuition fees (this is paid directly to the university/college in order to cover the costs of teaching you as a student) and £8,944 as a maintenance loan (this is paid to you in order to cover the costs of accommodation and living as a student). How much you can borrow in the maintenance loan will depend on your household income. There are also loans that can be taken out in order to fund postgraduate studies.

You will have to pay back your student loan once your income and dividends earnings reaches a certain threshold. This threshold will depend on which student loan plan you have.

You will pay at a rate of 9% on all taxable earnings above that threshold. This includes dividend income.

If you are an employee earning above the student loan threshold then the loan repayment will be deducted at the same time as your income tax and national insurance. If you are self-employed and earning above the student loan threshold then HMRC will work out how much you need to pay from your tax return. How much you pay does not depend on whether you are an employee or self-employed, only the method in which you make the repayments. It is also possible to make voluntary repayments.

Student Loan Plans

The following table shows the thresholds at which you need to start repayments of your student loans as well as explaining how you qualify for each plan.

Student Loan Plan Which Loan Plan Do I Have? Income Threshold For Repayments
Plan 1 This loan plan applies to you if any of the following are true:
  • You took out the loan in Scotland or Northern Ireland
  • You received funding from the EU at any time in Scotland or Northern Ireland
  • You took out the loan before the 1st of September 2012 in England or Wales
  • You took out the loan before the 1st of September 2012 and recieved funding from the EU in England or Wales
You need to start paying back a plan 1 student loan if you are earning over £18,935 a year.
Plan 2 This loan plan applies to you if any of the following are true:
  • You took out the loan on or after the 1st of September 2012 in England or Wales
  • You received funding from the EU in England or Wales on or after the 1st of September 2012
  • You took an Advanced Learner Loan for a course in further education whist living in England on or after the 1st of September 2012
You need to start paying back a plan 2 student loan if you are earning over £25,725 a year.
Your Student Loan
You currently have not selected a student loan plan. Select one on the calculator above to see how the calculations are done here

In your case from the calculator above you are earning a year, a dividend income of and are on student loan plan .

So you will pay 9% on in student loan repayments. This is your total income minus , the threshold for repayments on your student loan plan.

So you will pay in student loan repayments.

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