How much will my pay increase by?

WOODWOOD

Hi all,

I'm not sure if this is the right forum for this.

I am looking to move to a different job which could see pay increasing from 38,748 to 55,000 and I'm trying to work out what the actual take home would increase by, only taking of what I'd call government deductions, tax, NI etc.

I know that I would be further into the higher tax band so more would be going out as tax but is there also a higher rate for anything else, NI etc...?

I did a quick calculation just taking the extra tax off and got the 38,748 down to 29,648 and the 55,000 down to 39,400 but then NI etc would have to come off....

Thanks for any tips.

nearlyrich

http://www.thesalarycalculator.co.uk/salary.php


This is a good indicator of take home pay, even takes into account pension, student loans etc..

CrazyAngel_3

If you have an iphone there is a free app that is brilliant. I think its just called 'salary calculator' and the icon is a grey square with a £ sign in it.

You enter your salary, if you have a student loan, any pension contributions etc. and it will tell you how much you take home every hour, week, month, year.

Get it! Its good!

agrinnall

If you're on the standard 944L tax code then your calculation of tax paid is a long way out. I suspect you have forgotten your personal allowance. Oh, and you won't be "further" into higher rate tax, because you're not in it at all at the moment, unless you have a really horrible tax code. But you'll definitely be in it on the new salary.

Tax on £38,748 is £5,861 (NI £3,719, net pay £29,167)
Tax on £55,000 is £11,822 (NI £4,314, net pay £38,863)

Figures from http://www.thesalarycalculator.co.uk/salary.php

00ec25

rather than mess around with apps or online calculators it will be a lot better if you simply learn the calculation yourself, it should be very easy for someone earning that sort of sum

the Income Tax rates are here
http://www.hmrc.gov.uk/rates/it.htm
they work like this

salary 38,748
deduct personal allowance (ie tax code with 0 on the end of it) assume standard code 944 so 38,748 - 9440 = 29,308 so you have a taxable pay of 29,308
you pay tax at 20% on the first 32,010 of taxable pay
so all your income is at basic rate 29,308 x 20% = 5,861.60 tax

salary 55,000
55,000 - 9,440 = taxable pay 45,560
tax
first 32,010 x 20% = 6,402
rest of taxable pay (45,560 - 32,010) = 13,550 taxed at higher rate 40% so 13,550 x 40% = 5,420
total tax payable 5,420 + 6,402 = 11,822

national insurance
the NI rates are here , note NI works on a weekly basis , the tax "free" amount is £149 per week and there is also an upper earnings limit (£797 per week) above which your NI payable reduces from 12% to 2% .
http://www.hmrc.gov.uk/rates/nic.htm
as an employee you only pay Class 1 NI - note the following assumes you are NOT in a company pension scheme and therefore you are not contracted out

salary 38,748
tax free amount 149 x 52 = 7,748
upper limit 797 x 52 = 41,444

NI payable, all is below the upper earnings limit so all at 12% : 38,748 - 7748 = 31,000 x 12% = 3,720

salary 55,000
NI at 12% (41,444-7,748) = 33,696 x 12% = 4,043.52
NI at 2% (55,000 - 41,444) = 13,556 x 2% = 271.12
total NI payable 4314.64

Summary

salary 38,748 - income tax 5,861.60 - NI 3,720 = 29,166.40 Net Pay (ie 2,430 per month)

salary 55,00 - 11,822 - 4,314.64 = 38,863.36 Net pay (3,238 per month)

Note if you make pension contributions to a company scheme then the above calculations need to be adjusted, post back with the % contribution you make and I'll show you how to adjust the maths. Note if you contribute to a personal pension outside of the company then when you hit 55,000 pa you will need to claim a rebate from HMRC as that will not happen automatically

WOODWOOD

Thanks all for the replies.

00ec25, thanks for the in depth details and the explanation.
I currently contribute 4% to the company scheme. The new job doesn't offer a pension so I will be looking to start a personal one.

The lower paying job does have more benefits, like the pension, which is why I am trying to do these calculations to see what the overall benefit of the new job is once I've taken these things into account.

Thanks again.

agrinnall

00ec25 wrote: »

rather than mess around with apps or online calculators it will be a lot better if you simply learn the calculation yourself, it should be very easy for someone earning that sort of sum

While I'd encourage anyone to understand how their tax is calculated, I think it's stretching it a bit to say that your lengthy list of calculations is easier than putting 1 number (or a few if you're not completely standard) into an online calculator .

silverwhistle

agrinnall wrote: »

While I'd encourage anyone to understand how their tax is calculated, I think it's stretching it a bit <SNIP>.

True, it's like the use of calculators in general: it pays to have some knowledge of the order of magnitude you are expecting so that fat finger syndrome doesn't lead you astray: "hmmm, that doesn't look right".

You would assume someone earning that much would have some independent internet research skills and be hard-working to boot! Having said that, are there any Italian tax experts around here. If you think the UK system is complicated....

agrinnall

silverwhistle wrote: »

You would assume someone earning that much would have some independent internet research skills and be hard-working to boot!

Ah, well, that's another thing that really bugs me; unless the person is a footballer or similar I'm astonished that anyone can get into a position where they are earning twice the average wage and more but still not have a clue about the tax system.

silverwhistle

agrinnall wrote: »

Ah, well, that's another thing that really bugs me; unless the person is a footballer or similar I'm astonished that anyone can get into a position where they are earning twice the average wage and more but still not have a clue about the tax system.

Perhaps like me they're living abroad in a place with a complicated tax system which changes every 6 months and where none of the natives understand it either?:-)

No replies from any Italian tax experts yet, I see. <big grin>.

00ec25

agrinnall wrote: »

While I'd encourage anyone to understand how their tax is calculated, I think it's stretching it a bit to say that your lengthy list of calculations is easier than putting 1 number (or a few if you're not completely standard) into an online calculator .

didn't your maths teacher ever tell you that showing your workings is what scores the marks, not just getting the answer correct. You have to show you understand it, not that the calculator did it for you and you remain none the wiser

as silverwhislte says anyone earning 55k could have found an online calculator themselves and yet would still have no idea why their net pay has improved - granted though the question was how much will i earn, so sadly maybe the OP doesn't want to see past the £££