Anxiety is inevitable in every sphere of life. We are anxious to know if we are going to get tax returns at the end of the year, we sit down for hours trying to figure out if our taxes are right. I have seen folks making tax calculations with scientific calculators as if they are trying to solve some problems in science, engineering or mathematics.
Through this guide, we are going to help you calculate your basic taxes in the simplest and easiest form for you to understand, without you having to sit for yours trying to figure things out. Sit, relax and let us help you through it.
Two factors determine your salary after tax. Your income tax and National insurance. In addition, some other factors such as student loans, pension, bonus etc. We will look into one of these other factors in a moment.
Straight to it. If you earn £22,000 per annum, the basic deductions from your salary will include income tax and national insurance. A 22,000-salary earner will have a taxable income of £9,500. To get your taxable income for the year, you simply deduct your salary of £22k from your personal allowance. The personal allowance for 2020 is £12,500. This is the amount of money you are allowed to earn each tax year before you pay your Income Tax. Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person’s Allowance, or smaller depending on your income or if you owe tax from a previous tax year.
Therefore, we deduct 22000 from your personal allowance (£12,500) this gives us your taxable income of £9,500. From this calculation, all your taxes will come from £9,500 since this is your taxable income.
22,000 YEARLY AND MONTHLY TAX
From the above, we can see that we now know how much of £22k will be taxed. Now let us look at how this will spread yearly and monthly
Since our taxable income is £9,500, the basic rate for a £22,000 earner is 20%. Therefore, to find the yearly tax, we simply multiply our taxable income by basic rate, and then we divide it by 100. This gives us a yearly tax of £1,900. To get our monthly tax for 22k, we simply divide our year tax of £1,900 by 12; this gives us a monthly tax of £158.33.
Note*: We round the cost to the nearest whole.
22000 INCOME AFTER TAX
Gross pay is the income you receive before any taxes and deductions. Your annual gross pay is what is basically your annual salary. Your Net pay is what is left after all the necessary deductions such as Income tax and National Insurance have been taken off. This is often referred to as your take home pay. You actually get the money on payday.
So, therefore, if your gross income is 22000, we need to deduct your tax and National insurance from your gross income to arrive at your take-home pay. Since your annual tax is £1,900 and national insurance is £1,500, we then deduct these figures from the gross income, this gives us a total take-home pay for 22000 income as £18,600 per annum. This is what you get after all the deductions have been made.
MONTHLY TAKE HOME PAY FOR 22000 SALARY EARNER.
Since we already know the take home pay (£18,600) per annum after-tax, to get the monthly income for a 22,000-salary earner, we divide the take-home pay by the total months in a year (12). This gives us a monthly income of £1,550.00.
Now that you know your monthly and yearly take-home pay. Some employers might pay you in cash, but the most common way of receiving your wage is through your bank account.
If your wages are paid through a bank account and your employer enrols you into a scheme called Pay As You Earn, then your Income tax and National Insurance contributions are deducted through the Pay As You Earn scheme (or PAYE for short).
This means that you do not have to worry about making tax payments.
One other major advantage of being paid directly into your bank account is that your employer should enrol you into a scheme called Pay As You Earn (or PAYE for short).