Calculation to determine the tax on my tips

rezarf

Hi,
Tried searching for a previous thread, but anything with the word "tips" in the search doesn't help.
Info I work in Scotland, I have all my income and expenditure and I used a handy tax calculator over at uktaxcalculators, this worked great as I could see a full breakdown especially with the Scottish 19 & 20% tax thresholds. 
However, I need a calculator to determine how my tips fit into this, the information over at HMRC states that I woild be taxed on my tips but not pay NI Class 4 which is 9% on profits over £8632.
Can anyone help with a calculation or even a excel formula?
Thanks
Frazer  

oldbikebloke

depends entirely on how the tips are paid to you where NI applies or not
https://www.gov.uk/tips-at-work/tips-and-tax

if it does, it is not class 4 as that applies to self employed people (hence the reference to profit), you would pay Class 1 where applicable.
 

rezarf

oldbikebloke said:

depends entirely on how the tips are paid to you where NI applies or not
https://www.gov.uk/tips-at-work/tips-and-tax

if it does, it is not class 4 as that applies to self employed people (hence the reference to profit), you would pay Class 1 where applicable.
 

Thanks for the response.
Yes I these are direct cash tips so are included as income and taxed as normal. However, they would not be included in Class 4 NI calculations. So im wondering if there is a calculator to work this out, if not can anyone help with how I would calculate this in excel?

oldbikebloke

rezarf said:

Thanks for the response.
Yes I these are direct cash tips so are included as income and taxed as normal. However, they would not be included in Class 4 NI calculations. So im wondering if there is a calculator to work this out, if not can anyone help with how I would calculate this in excel?

as I said NOT CLASS 4 
surely you can see all you have to do is add the tips to your pay and compare that combined total against the tax brackets to decide what tax rate applies.
Either the tips will cause the total to straddle a bracket or they won't.

Presumably you are talking about 19/20 tax year so 

Over £12,500 to £14,549	Starter rate	19%
Over £14,549 to £24,944	Basic rate	20%
Over £24,944 to £43,430	Intermediate rate	21%
Over £43,430 to £150,000	Higher rate	41%

if total less than 24,944 then x the tip amount on its own by 20% and that is your answer

if the total means you straddle then simply split the tips amount into the value up to the threshold (x that tax rate) and the amount over the threshold (x the next tax rate).
You do not need a salary calculator to do that maths, you just need any old calculator that can do multiplication.