Income tax calculator UK

What is Income Tax?

Have you ever looked at your payslip and wondered how much tax is deducted from your salary in the UK? Well,  you’re not alone! It’s not always obvious what’s going where, or why.

So, before we jump into the numbers with our income tax calculator UK, it’s worth understanding what Income Tax is. 

Essentially, it’s a contribution that most people in the UK make based on their earnings. But here’s the silver lining: you only start paying it once your income goes over a certain amount, known as the Personal Allowance. This is a tax-free portion of your earnings that everyone is entitled to, unless your income exceeds a higher threshold. If you earn above this, HMRC gradually removes your Personal Allowance.

How is the tax calculated?

The amount of tax deducted from your salary in the UK depends on how much you earn overall. Income Tax is calculated using set bands and rates defined by the government, usually reviewed in the Spring or Autumn Budget.

It’s important to remember when calculating your taxes that the rates only apply to a portion of your income, not the entire amount. For example, if you earn £60,00 a year, you’re not taxed 40% of this full amount. It breaks down like this:

• £12,570 = tax-free
• £37,700 = 20%
• £9,730 = 40%

Our UK income tax calculator will show you exactly how much tax is deducted from your salary and how the bands apply to you.

What about expenses?

When you’re self-employed, you can deduct your business spending from your overall yearly earnings so that you’re only paying tax on your profits. This business spending is known as your expenses.

To deduct expenses, it’s essential to keep a record of what you spend, on what, and when. Take a look at our guide on why it’s important to keep receipts below if you want to read more. To use the TaxScouts service, we don’t need to see your receipts, but we will need to see your records (whether in a spreadsheet or downloaded from the accounting software you use).

Can I use this as a Self Assessment tax calculator?

Yes!

If you’re calculating your Self Assessment tax bill, just switch to the self-employed button in the Your Situation section. Based on the amounts of income you’re earning, we’ll work out the Income Tax you and National Insurance (NI) contributions you owe on your self-employed profits. 

If you’re both employed and self-employed, or you’re employed with another side hustle – like investing, an Airbnb business, etc. and you want to work out what tax you owe based on your total income, check out our other tax calculators. 

​​And remember, unlike PAYE, where tax is deducted from your salary automatically, Self Assessment tax bills are paid manually. You’ll need to submit and pay both your Income Tax and National Insurance by 31st January following the end of the tax year.