How much will my take home pay be?

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Anyone working in the UK is liable to deductions to their salary for things like Income Tax, National Insurance and in some instances, pension savings. This can mean your take-home pay is lower than your gross pay – but there’s an easy way to work this out.

For anyone with a payslip, any deductions should be clearly marked to show you how much you have contributed to National Insurance and Income Tax.

However, if you’re just getting started in a job, you may want to know what your take-home pay will be to help you budget straight away.

To do this there are a number of handy tools online you can use to figure out what will be deducted from your pay.

One comes from Money Saving Expert, and requires you to input your gross – or pre-tax- income, your age, the tax year, and how much per month you contribute to your pension.

You can find the link for this here.

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This will then tell you how much you’ll take home yearly and monthly, as well as how much National Insurance and Income Tax you will pay per year.

For example, someone aged under 66, who is on a salary of £30,000 and makes a five percent pension contribution per month would see the following for the tax year 2022/23.

  • Take-home pay – £22,915
  • Income Tax paid – £3,186
  • National Insurance – £2,399
  • Until July would take home £1,887 per month
  • After July would take home £1,917 per month

The change after July is due to a change in the threshold at which employees start to pay national insurance. This came into effect on July 1, 2022.

What is National Insurance?

National Insurance is paid by every worker in the UK aged 16 and over earning above £242 a week or self-employed and making a profit of £6,725 or more a year.

You will see NI contribution payments on your payslip, as these are a tax on earnings.

Paying National Insurance means you can get some state benefits – however, this depends on your working status.

For example, if you have met the criteria of years of NI contributed, you will receive state pension at state pension age.

For those moving to the UK, you may have a National Insurance number allocated on your biometric residence permit.

What is Income Tax?

Similar to NI, Income Tax is tax you pay on your income.

You will pay tax on a range of things including

  • money you earn from employment
  • profits you make if you’re self-employed – including from services you sell through websites or apps
  • some state benefits
  • grants and support payments made to you or your business because of coronavirus, including the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund – read about reporting coronavirus grants and support payments
  • the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)
  • most pensions, including state pensions, company and personal pensions and retirement annuities
  • rental income (unless you’re a live-in landlord and get less than the rent a room limit)
  • benefits you get from your job
  • income from a trust
  • interest on savings over your savings allowance

Most people pay Income Tax through a system known as PAYE or Pay As You Earn.

You will be assigned a tax code which tells your employer how much to take off your pay.

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