Pay rise of £1000, what's that after tax?

bob_dob

Hi,
please may i ask a seemingly obvious question?
A friend has just had a pay rise of £1000 from £16,000 to £17,000, we are trying to work out how much extra that works out to per month 'take home'/net pay!
Is it basically £1000 per year minus 20% basic tax which comes to £800 divide by 12 equalls £66?
Please feel free to correct my pathetic maths!
Thank you!

babyfruitella

Yeah, thats right. £1133 a month less NI.

Bean_Counter

£1,000 less 20% basic rate tax less 12% NI is £56.67 extra per month.

You will also need to factor in if they pay pension contributions at a % of salary, or if they have any arrestments etc that might change.

Baldur

bob_dob wrote: »

Hi,
please may i ask a seemingly obvious question?
A friend has just had a pay rise of £1000 from £16,000 to £17,000, we are trying to work out how much extra that works out to per month 'take home'/net pay!
Is it basically £1000 per year minus 20% basic tax which comes to £800 divide by 12 equalls £66?
Please feel free to correct my pathetic maths!
Thank you!

If it was as simple as just the tax, you would be roughly correct (around £66.67) but there may be other deductions, such as pension/National Insurance contributions, etc., which would further reduce the 'take home' pay.

chrisbur

Assuming not paying student loan or in any pension that would affect take home pay then your tax calculation is correct but need to add 12% for national insurance. This will give you the amount that he would get assuming nothing else had changed, but starting this tax year the tax allowance and NI free allowance have both gone up so his net pay would have increased without a pay increase. The new tax year tax/NI reduction will just about cancel out the extra tax/NI due on the pay increase.

Rough calculation is extra £80 a month taking all this into account and assuming pay increase from month 1 of tax year and nothing else is affected other than tax and NI.

bob_dob

Hi and thank you so much for the wonderful replies.
Firstly, he does pay a student loan so i'll have to factor that in!
Secondly, please may i ask a question about NI? I thought i heard this morning that most people will be paying an extra penny in the pound? Is there also a higher allowance before payIng NI too?

CLAPTON

bob_dob wrote: »

Hi and thank you so much for the wonderful replies.
Firstly, he does pay a student loan so i'll have to factor that in!
Secondly, please may i ask a question about NI? I thought i heard this morning that most people will be paying an extra penny in the pound? Is there also a higher allowance before payIng NI too?

you pay tax at 20% on anything over 622 per month
you pay 12% NI on anything over 602 per month
you pay 9% student loan deduction on anything over 1250 per month
you may pay pension deduction

redped

Have a look at http://www.thesalarycalculator.co.uk/salary.php - you enter salary, any student loan, etc., and it gives you the take-home pay complete with a breakdown of tax & NI. Very handy for those "what if I earned £X" moments when bored at work.

bob_dob

Thank you for that, that is very kind of you!
Unfortunately i cant view that link until i get home later and use my PC.
My final question, if i may, is how much extra will i take home, thanks to the new NI change, bearing in mind my gross pay per month is £1675?
(thank you in advance)

suso

If you are on the standard tax code of 647L and expect to be on 747L for the new tax year then your tax won't change.

The point at which you start to pay tax has been increased by a thousand pound so you still have the same amount of taxable income.

You will expected to pay approx 40 pound per year extra NI, and double the amount of Student Loans, (presuming NI is deducted at standard "A" rate)

rough back of a beermat calc is
2010/2011 take home pay - £1072.00 per month
2011/2012 take home pay - £1145.00 per month (after pay rise)

difference between the two - £73.00

jem16

Also helpful is this website - it doesn't handle pension contributions too well in some cases.

http://listentotaxman.com/