Calculate Gross Pay Per Hour

Gross Salary

The total salary before any deductions. It includes base pay as well as any additional earnings, such as bonuses and overtime.

Income Tax

Tax Bands: UK income tax is progressive, meaning you pay higher rates on higher earnings. The main tax bands (as of 2023-2024) are:

• • Personal Allowance: Up to £12,570 – 0% tax
  • Basic Rate: £12,571 to £50,270 – 20% tax
  • Higher Rate: £50,271 to £125,140 – 40% tax
  • Additional Rate: Over £125,140 – 45% tax
• Personal Allowance Reduction: This allowance is reduced by £1 for every £2 earned above £100,000, phasing it out entirely at £125,140.

National Insurance Contribution (NIC)

• Employees and employers pay National Insurance based on earnings:
  • Employee NIC: For most people, it’s calculated based on earnings above the Primary Threshold (around £12,570) and caps at the Upper Earnings Limit (£50,270). Rates vary:
    • Class 1 Contributions: Employees pay 8% on earnings up to the upper limit, then 2% on earnings above it.
  • Employer NIC: Employers contribute 13.8% on earnings above a certain threshold, which doesn’t impact the employee’s net pay directly.

Pension Contributions

• Contributions to workplace pensions are typically deducted automatically. They can include:
  • Employee Contribution: Often 5% of qualifying earnings.
  • Employer Contribution: Often 3%, depending on the scheme.
• Pension contributions are usually taken before tax, which can reduce taxable income.

 Taxable Benefits

Benefits like company cars, health insurance, and other non-cash perks are subject to tax, as they increase the taxable income.

These are reported on a P11D form and added to taxable income to calculate tax due.

Overtime and Bonuses

• Overtime: Additional pay for hours worked beyond contracted hours, typically taxed and subject to National Insurance like regular salary.
• Bonuses: Lump-sum payments awarded based on performance, taxed as income and also subject to National Insurance.

Net Salary

• After all deductions (tax, NIC, pension contributions, salary sacrifice, student loan repayments), the remaining amount is the net salary or take-home pay.