This is a tool that calculates the cost of a UK employment in terms of the income tax and national insurance contributions (NICs) arising from the employment, and displays the results in two tables, the first for the employee and the second for the employer.

The employee results table contains monthly, weekly and annual rows to indicate what the gross income, income tax, national insurance contributions (Class 1), total deducted (tax plus NICs) and net income would be for these periods if employment was for the whole tax year (as long as there is at least some tax or contribution due during the year).

The employer results table contains monthly, weekly and annual rows to indicate what the gross wage, national insurance contributions (Class 1) and total cost would be for these periods if employment was for the whole tax year.

Additionally, if required, the tool displays more detailed results from the tax calculation: the tax allowances used, the tax band details (showing the range, taxable income, tax percentage rate and calculated tax for each band), and, if relevant, any tax rebate applied.

Note: It is not possible to specify any additional employment benefits (taxable or otherwise) in this tool.

Note: Since age related tax allowances are dependent on the total income and this tool only considers the earned income from employment, the allowances used for these calculations may differ from the allowances which would be applied if other income sources were taken into consideration.

For the calculations, it is necessary to supply the following compulsory information:

• Your gross income in either monthly, weekly or annual terms.
• The tax year, noting that this runs from 6 April in the first year to 5 April in the next.
• Your date of birth, in the default format (DD/MM/YYYY), unless you change the format in the menu. To reduce the time needed for data entry, a default date of birth is provided that can be used by most tax payers for calculating tax. Only if you are 65 or over during the tax year, and age related allowances come into consideration, is it essential to provide an accurate birth date.
• Whether you are male or female.

If you qualify for any of the extra income tax allowances, i.e. additional to the personal allowance, then supply the relevant parts of the following information:

• If you qualify for the blind person's allowance, choose Yes in the drop down box.
• If you are entitled to the married couple's allowance, choose one of the options starting with Yes in the drop down box. If you were married, or became a civil partner, before the start of the tax year, then select Yes - Full to indicate that you are entitled to the full allowance. If you were married, or became a civil partner, during the tax year, you need to work out how many tax months of allowance you are entitled to, and select the appropriate option. To determine the entitlement, begin with the full 12 months and deduct a month for each complete tax month before the date of your marriage or civil partnership.
• The date of birth of your spouse, if your spouse is older, since this may affect your married couple's allowance.
• If you are entitled to the married couple's allowance and wish to apply the tax rebate associated with this allowance to your earned income tax, choose Yes in the drop down box.
• Note: The calculator assumes that only one member of an entitled couple gets the married couple's allowance. It does not allow for the specification of the transfer of part of the allowance to the other spouse or partner.

If you need to specify any extra national insurance options, then supply the relevant parts of the following information:

• If you are a married woman and are entitled to pay reduced contributions, e.g. you pay a lower rate of Class 1 national insurance when in employment, choose Yes in the drop down box. Note that this right to reduced contributions had to be applied for before 21 May 1977.
• If you belong to a contracted-out occupational pension scheme, select whether it is salary related or money purchase in the drop down box.

The data (e.g. rates and allowances) used by this tool was obtained primarily from...

http://www.hmrc.gov.uk/rates/it.htm

and...

http://www.hmrc.gov.uk/rates/nic.htm

Associated tool link: http://www.coggit.com/tools/uk_cost_of_employment.html