This article will be discussing how to use an income tax calculator in the United Kingdom. İt is important to understand what tax code you are on and how your salary is calculated. This article will provide a guide to using a UK income tax calculator.
What does this calculator do?
What is income tax?
If you are unsure about any taxes or regulations within the United kningdom and you need to seek further tax information, you can always visit the HR and the customs' website.
Income Tax is a tax issued on income. Not all income is taxable and you're only taxed on 'taxable income' above a certain level. Therefore, there is a threshold for what is considered taxable income.
Even then, there are other reliefs and allowances that can reduce your income tax bill and in some cases, it means that you've no tax to pay. For example, students do not need to pay tax with part-time jobs.
This calculator is one of the many tax calculators available to help calculate your home income or your take-home pay. İt will provide an estimate of your income after tax and National Insurance contributions. You just need to enter your gross salary and select the relevant S2P (State Second Pension) option. If by any chance you don't know or you are unsure of whether you are contracted in or out, you need to select 'no' in the question below. The calculation will assume that you are contracted in. However, if you are a member of an occupational pension scheme, you are probably contracted out of S2P. However, this is only a brief guide on how to use this calculator. There are many guides online to assist you on how to use them and there are many available at your disposal.
Why you need to pay tax? We need to pay taxes in one form or another- mostly income and sales taxes. However, why do we pay these taxes? There are many public services offered to citizens who could not be managed effectively under any other system and therefore the Government applies a fiscal system where tax is imposed to the general public and our taxes fund for the public services. Examples would include health and social security and City councils. These services are necessary and we would not be able to afford them if we were to pay as we use each service. Our tax system is based on our "ability to pay." The more money we earn, the more taxes we pay. Also, the less we earn, the less we pay.