If you are wondering what your take home salary will be after-tax, then, you are at the right place. Often times, people are worried about their expenses and hoping their salary will sustain them for the month. However, we will help you determine how much will be left after tax deductions. We believe this will be a significant pointer to your spending and saving plans.
It is worth knowing that income tax is not always the same. The United Kingdom income tax is designed in such a way that you pay more if you earn more. A person who earns £21,000 per year will have to pay lower income tax compared to someone who earns £45,000 per year. This means that as your income increases so also do the amount of Income Tax you pay.
It is an attempt to make paying Income Tax as fair as possible so that those who earn the most contribute more.
If you live in Wales, the Welsh Government now sets income tax rates. These are currently the same as for England and Northern Ireland in the 2020-21 tax year. If you live in Scotland, the rates are different.
£21000 A YEAR IS HOW MUCH A MONTH AFTER TAX?
We are looking at an annual salary of £21,000 for the year 2020/2021. The actual income for the month will be £1,750, and monthly Tax sums up to £141.67 per month. When we take the monthly Tax of £141.67 from the monthly gross income of £1,750, then we have £1,608.33. Therefore, the take home pay for every month of the year is £1,608.33 after tax deduction.
However, do not forget so quickly. The National Insurance is separate from the income tax. Every month, most UK workers’ have National insurance deducted from their pay every month. When you earn over £9,500 per month, you are required to pay for the National insurance.
In this case, the National insurance deducted for £21k a year salary is £115 per month. Therefore, the two significant taxes are income tax and National insurance.
The breakdown of these taxes is:
Monthly taxes= £141.67.
Monthly deduction for National insurance= £115.
This brings the total deduction to £256.67. When we deduct £256.67 from the actual monthly gross income of £1,750, we then have £1,493 as a monthly take-home salary from the annual salary of £21k.
BREAKDOWN OF DEDUCTIONS FOR A £21K EARNER.
The Income-tax and National insurance.
The tax system in the United Kingdom is based on marginal tax rates. This means that a certain percentage of income you earn is pulled out from a certain threshold. You do not pay the same amount of tax on everything you make.
• you pay 0% on earnings up to £12,500 for 2020-21 tax year
• then you pay 20% on anything you earn between £12,501 and £50,000
• you’ll pay 40% Income Tax on earnings between £50,001 to £150,000
• If you earn £150,001 and over you pay 45% tax.
Therefore, if you earn 21k for the year, your taxable income will be £21000-£12500= £8500, then you pay a 20% tax on your taxable income (£8500); this gives us 1,700 per year in Tax, 141.67 per month and 32.69 per week.
The National insurance contributions (NICs) is deducted from your income. These deductions are channelled towards building your entitlement to certain state benefits; this could be the State Pension or Maternity Allowance.
As a worker, you are required to pay the Class 1 NICs on your income. In addition, your employer will be mandated to make a secondary contribution of 13.8% of earnings above £166 per week.
In this light, you are required to pay National Insurance contributions if you earn more than £183 a week for 2020-21 tax year. Since your gross income is £21000, you automatically earn £403.85 as weekly income. Therefore, a £21000 salary earner will be required to pay for National insurance.
In conclusion, if your salary is £21,000, then after tax and national insurance you will be left with £17,920.
This means that after-tax you will take home £1,493.33 per month, or £344.62 per week, £68.92 per day, and your hourly rate will be £8.62 if you are working 40 hours per week.