UK Tax (PAYE) Calculator

The Personal Allowance (Tax Code 1257L)

In the UK, almost everyone is entitled to a "Personal Allowance" — an amount of money you are allowed to earn each year completely tax-free. For the 2024/25 tax year, the standard Personal Allowance is £12,570.

Your Tax Code (displayed on your payslip) essentially tells your employer what your allowance is. "1257L" is the most common code, representing £12,570. If you owe tax from a previous year or receive company benefits (like a car), HMRC will reduce this code, meaning you'll pay tax earlier.

The £100k Trap: For every £2 you earn over £100,000, your Personal Allowance decreases by £1. This creates a hidden, extremely high effective tax band (around 60%) between £100,000 and £125,140, where your allowance is entirely wiped out.

Income Tax Bands (England, Wales, N.Ireland)

After your Personal Allowance is deducted from your Gross Salary, the remainder is taxed incrementally:

• Basic Rate (20%): Applied to the next £37,700 (Earnings from £12,571 to £50,270).
• Higher Rate (40%): Applied to the next £74,870 (Earnings from £50,271 to £125,140).
• Additional Rate (45%): Applied to anything earned over £125,140.

Note: If you ticked the box that you live in Scotland, entirely different bands (Starter, Basic, Intermediate, Higher, Advanced, Top) apply automatically in the background.

National Insurance Contributions (NICs)

National Insurance is practically a secondary income tax used to fund the NHS, state pensions, and unemployment benefits. In 2024, the primary threshold (Class 1) rates were reduced:

• 8%: Paid on weekly earnings between the Primary Threshold (£12,570/yr) and the Upper Earnings Limit (£50,270/yr). (Note: Reduced from 10% in April 2024).
• 2%: Paid on everything earned above £50,270/year.