Calculating a payslip in the UK can be quite difficult but not impossible, thanks to the downloadable spreadsheet we’ve created
1) Login/register to purchase and download the UK Payroll Spreadsheet:
2) Watch the video explainer below:
The following information relates to the tax year 2020/2021 (April 6th 2020 to April 5th 2021)
UK (England, Wales, Northern Ireland) PAYE Tax Bands:
Basic Rate (taxed at 20%): Taxed on income between £12,501 and £50,000 (you pay tax on £37,500)
Higher Rate (taxed at 40%): Taxed on income between £37,501 and £150,000
Additional Rate (taxed at 45%) Taxed on income above £150,000
Scotland PAYE Tax Bands:
Starter Rate (taxed at 19%): Taxed on income between £12,501 and £14,585 (you pay tax on £2,084)
Basic Rate (taxed at 20%): Taxed on income between £14,586 and £25,158 (you pay tax at this rate for a maximum of £10,573)
Intermediate Rate (taxed at 21%): Taxed on gross income between £25,159 and £43,430
Higher Rate (taxed at 41%): Taxed on income between £43,431 and £150,000
Additional Rate (taxed at 46%): Taxed on income above £150,000
Personal Allowance & Personal Allowance Reducer
Personal allowance for the tax year 2020/2021 is £12,500. The above information assumes the individual is receiving the Personal Allowance for tax-free income of £12,500 in the tax year. The Personal Allowance is reduced by £1 for every £2 earned over £100,000. Your personal tax allowance will be £12,500 if your tax code is 1250L. Your tax code may be different to this if you have tax owing or are on emergency tax.
Employee’s & Employer’s National Insurance Contributions
Primary Threshold: Gross earnings up to £9,500 will not be subject to NICs
Between Primary Threshold and Upper Earnings Limit: Gross earnings between £9,501 and £50,000 will be taxed at 12%
After Upper Earnings Limit: Gross earnings after £50,001 will be taxed at 2%
NICs for Employers: Employers pay 13.8% NICs for gross income over £8,788 per year
Pension Contributions (Employee, Employer and Government)
Up to Lower Level of Qualifying Earnings: Gross earnings up to £6,240 will not be subject to Pension contributions
Between Lower Level and Upper Level of Qualifying Earnings: Gross earnings between £6,241 and £50,000 will be subject to pre-tax pension contributions of 4% for the employee and 3% for the employer. As it’s pre-tax, the government is technically providing a 1% contribution
After Upper Lever of Qualifying Earnings: Gross earnings after £50,001 cannot be considered for tax-efficient pension contributions.
- We recommend using NEST as your pension scheme provider
Uh-oh. I’m still unsure how this works, help!
Talk to your accountant – or even better, talk to us!
Let’s wrap this up
So there you have it – hopefully knowing how to calculate a UK payslip is a little more clear and a little less scary to you. Of course, if you are still boggled by it or just want to make sure it is done right, book a free Discovery Call with us today.
Disclaimer: This guide is for informational purposes only and specific accounting and tax advice should always be obtained where appropriate.