What is the formula for calculating your Income Tax ?

[Stevie13]

What percentage of your wages do you also pay for your pension ?

[shaking]

6.l5 at present

[factor-fiction]

I'm not sure why your question title is asking something completely different from your question. Do you want a tax formula or do you want to know what pension contribution I pay?
If the latter, then I pay 6%. Thank you for asking.
But schemes differ and some require no contribution, others require maybe 7%. I think 6%-7% is probably the norm

[terambulan]

22% tax 12% National Ins & Pension.......approx

[terambulan]

Divide annual income by 52w. From weeks income deduct �89-(free from tax). Divide remainder by 3and deduct third from remainder. Add back �89. Difference of this figure from weekly income = Tax & NI. BUT have made no allowances for u as only the Tax Office will tell u.

�50,000 /52=�961.5 - 89 = 872.5 \ 3 = 290.8

872.5 - 290.8 = 581.70 plus �89 = �670.70 Net Income

Tax & NI = �290.80

[terambulan]

Y did u ask......?

Stevie13
Fri 20/06/08
17:12 Yes your daughter is quite right.
She will probably clear �840 per month, maybe less.

This is an extremely good wage for a 19 year old after tax.

13,000 P.A = 1083.33 P.M
Tax allowance = � 5620 beable to earn before being taxed at 20%
Anything over � 468.33 P.M

Tax �123
Nation Ins approx 7.5% = � 86.64
Pension at 8.5 % = �81.20

Leaves your daughter with � 792.50 Approx P.M

However there is more to it than that because you get an allowance on your Pension and NI contributions.

So if you add � 50 back on it gives you � 842.50

Hope this helps !!!

[Stevie13]

Terambulan

The reason i asked the question is because i know the basics how tax is calculated. The previous question intrigued me so i looked at my own contributions.I know that you pay 20 % tax 2008/09 on money up to 36000, and 40 % over that, but what i dont know is the proper formula. I also pay 8.5% pension and i thought that was a bit high, thats why i am also asking about how much pension you should be paying .

Cheers

[Skyline D]

There's no set amount you "should" be paying on your pension. It could be nil and indeed many employers don't operate any scheme at all so there wouldn't be a deduction even if you wanted one. There is a maximum pension contribution but it varies depending on your age and very few people will need to be worrying about it on here.

[Stevie13]

Thanks Skyline !!!

[terambulan]

My calculations are according to my local tax office instructions in 2006. There are changes this year but have yet to study the paper-work..

[Stevie13]

Thanks Terambulan
After a bit of research i have found out this year
Tax will be 20% up to �36,000
National Ins is 11% and you get a 1.6% rebate if you contract out of SERPS making it 9.4%