Online Calculators since 2009
You never know where you are until you know where you have been. As we discussed in the £16.00 Tax and Payroll Deductions Calculations, understanding your salary and payroll deductions is essential. In this suite of salary calculations we review and compare historical tax deductions with a view to providing insight into how tax and payroll deductions have influenced the take home pay of a £16.00 annual salary since 2009.
This PAYE calculation includes a table of tax calculations and graphical overview which details:
In order to provide a balanced comparison of historical salary deductions key factors are reverse engineered to provide a baseline. For example, a standard 1% company pension contribution in 2019 is applied against all historical tax years even though company pension schemes were not as legislated (Government encouraged) in 2009 as they are now. We still apply this percentage however to allow a like-for-like analysis.
You can view the same analysis and graphic example for an alternate salary by entering a new salary amount in the 'Generate a New Exampe' tool and clicking the generated salary link.
In this £16.00 Salary Calculation we have isolated the following payroll elements:
As Chart 1 demonstrates, salary deductions are designed to be in equal amounts each month. The aim being to provide a steady stream of income to the treasury throughout the tax year rather than waiting until the end of the tax year to collect income tax funds. This system suits the UK Government as they effectively have a quarterly budget they can work too, monitoring relative income tax streams to keep and eye on the employment metrics. The split approach also works well for employees as their tax is deducted as they earn rather than in one large lump at the end of the tax year.
Chart 1 uses a flat 12 split, that is the £16.00 and associated payroll deductions are calculated as 12 even splits. Not all employers pay an exact 12th of a salary each monthly, some prefer to pay a monthly split based on the number of days in the month, this is typically achieved by dividing the salary by the number of days in the year and then multiplying by the number of days in each month. Chart 2 illustrates how this affects the relative salary deductions and income tax streams to the treasury.
Chart 2 shows each amount payroll deduction per month in 2019 as calculated within the UK Tax Calculator 2019/20 based on a normal PAYE Employee earning £16.00.
Chart 3 provides a historical comparative analysis of an annual salary of £16.00. Below the chart are the comparative deductions and net pay amounts.
The Comparative analysis uses common taxable features and deductions which have altered as various chancellors have tinkered with the UK's payroll deductions. Common taxable features include Company Pensions, new legislation is increasingly pushing people and companies into company pension schemes and rather than opting in, every single employee needs to opt our (a headache for small, medium and large business who have additional payroll and administrative costs as a direct result). In contrast, it's good news for employees as they benefit from a better pension pot and, when they join a company pension scheme, their employers must contribute. This in affect means a larger salary.
Company Pension schemes have phased in since 2010, our figures apply the same pension factoring across the historical analysis, our aim being to facilitate a realistic comparison of PAYE, NIC's and the impact of changes to Personal Tax Free Allowance with the distortion of Salary Sacrifice Schemes.
|Adjusted Gross Income||15.84||15.84||15.84||15.84||15.84||15.84||15.84||15.84||15.84||15.84||15.84|
|Tax Free Personal Allowance||6475||6475||8105||8105||9440||10000||10600||11000||11500||11850||12500|
|Company Pension: Employee||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16|
|Tax Due [PAYE]||0||0||0||0||0||0||0||0||0||0||0|
|Company Pension: Employer||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16||0.16|
|Employers NIC Contribution||0||0||0||0||0||0||0||0||0||0||0|
|Salary Package [Cost of Employee]||16.16||16.16||16.16||16.16||16.16||16.16||16.16||16.16||16.16||16.16||16.16|
Most people will find that they actually pay less PAYE now than someone on the same salary would have paid a number of years ago but, in contrast, we all pay more National Insurance Contributions now than ever before. This is understandable given the increasing lifespan and the ever growing population in the UK.
Chart 4 illustrates how home of their gross income an individual earning £16.00 has historically received as take home pay (the money you receive into your bank after tax and payroll deductions have been made).
It is interesting to consider how your salary compares against previous years. The best approach to understand a £16.00 Salary and what it can buy you is to compare the salary against the annual inflation rate. The table and chart below provides historical salaries equivalent to a £16.00 Salary in 2019.
We hope your found this salary analysis useful, we welcome your feedback and are happy to provide additional information on this page to support your needs. If you require specific salary information or graphical payroll analysis please contact us. You may wish to browse the salary, payroll and payslip tools and information below
This PAYE Calculation provides an annual example of Salary Calculation for an Employee earning £16.00 per annum and is designed to provide a graphical illustration of the seperate Tax and Payslip elements. If you would like to see a periodic breakdown of the PAYE Calculation or view specific details of how each element of Tax, PAYE and NIC were calculated, please select one of the relevant calculations below.
The UK Tax calculator is updated for 2019/20 tax year and uses 2019/20 tax year as default to produce the PAYE Calculations, tax illustration and graphical overviews below.
If you have never really looked at your payslip or perhaps it's your first job and the first time you have looked at a payslip, it is worth spending a few minutes getting to know what the different deductions and payroll details are. Understanding your payslip and payroll deductions allows you to identify potential errors and know what to do when mistakes are made so you can claim back any overpaid tax. The guides below are easy to read and designed to provide a basic understanding of payslip and payroll deductions.
|What is Gross Pay?||What is Net Pay?|
|Employees National Insurance Contributions (NIC's)||Employers National Insurance Contributions (ENIC's)|
|What is PAYE (Pay As You Earn)?||Giving to Charity, what's in it for you?|
|State Pensions explained||Company Pensions explained|
|Tax Avoidance and Tax Evasion||What is my Tax Free Allowance?|
|How to pay less NIC's||Top 10 Tax Saving Tips|
A simple payslip example for an annual salary of £16.00. A quick tool that allows you to compare your own payslip. Select specific months to see how your future payslips will look including total earnings and deductions. Useful for understanding your total income and deductions for financial planning such as mortgage calculation or loan affordability etc.
Provides a periodic breakdown (Day, week, month etc.) of the calculated payroll deductions relevant to a £16.00 annual Salary. Includes links to supporting information which explains each tax and payroll deduction and what you can do to reduce the amount of PAYE tax and National Insurance you pay. Everyone who pays tax can reduce the amount of tax they pay but most don't take the few minutes needed that could save them £££'s. Don't be a fool, it's your money, make sure you get what you are entitled to, make 2019 the year that you get your finances in order.
We believe that tax and payroll calculations should be transparent. This tool provides the calculations and breakdown of results that are used to produce the PAYE, National Insurance, Pension, Dividend, Student Loan, Salary Sacrifice, etc. calculations used in our Tax, Payroll and Salary Calculators. If you don't understand how your wages are calculated and have no idea what goes on in the background behind your payslip, this is the perfect tool for building your understanding. We believe that it is important to understand how your tax is calculated so that, when the Chancellor of the Exchequer announces new Income Tax rates and changes to PAYE Tax Thresholds, you understand how that will affect your £16.00 Salary.
As an employer it is important to understand your holistic employment costs when taking on new staff or increasing / decreasing salaries. The employer payroll calculation for an employee on a £16.00 salary illustrates you Employer National Insurance Contributions (ENICs) and associated Pension costs to provide a cost of employment calculation. The employer payroll calculation also includes historical information so you can understand how employment costs have changed over the years as payroll taxes have been adjusted and new employer legislation introduction.
It's incredible how quickly the years pass but not as incredible as the sum of overpaid, unclaimed tax that sits within the treasury each year simply because individuals don't make the basic checks on their P60. It is wrong to assume that HMRC get your tax calculations right every year. Whilst electronic payslips (epayslips) have facilitated a more accurate and timely flow or financial information to and from HMRC mistakes are still made. Typical mistakes include the incorrect setup of salary sacrifice schemes, pension schemes and applying the wrong tax code. In addition to this you can also claim back the unclaimed tax relief on your donations. We brits are great at donating to worthy causes like Comic Relief, Sport Relief, Help for Heroes and other domestic charities but most never claim back their tax relief. For a basic rate tax payer that is £5 of tax relief for every £20 you donate. If you don't claim that back, the treasury keep it. So, don't wait for the end of the tax year, give yourself a quick finance MOT, our P60 section explains all you need to know and what to do to get your money back.
The Dividends calculator allow you to adjust the split of your £16.00 income by using a slider to alter the percentage split you take as salary or via a dividend. This tool allows you to understand which solution is best for your circumstances. The £16.00 Dividend calculator will automatically calculate Corporation Tax, Dividend Tax and all associated payroll deductions so you can make an informed decision on the most appropriate income stream. This is a great tool for contractors and company directors and popular with those who and looking at the benefits of setting up their own limited company rather than working as a sole trader or as an employee looking to start their own business.
With property prices constantly on the rise it can seem as though your will never save a large enough deposit to buy your dream home on an annual salary of £16.00 (you could borrow between £48.00 and £72.00). Our