If you're changing jobs and wondering how much money you'll take home each month, you need to calculate net pay. Net pay is the amount of money you receive after all gross figures have been deducted. Common deductions include tax payments. Calculating this figure gives you a better idea of your spendable income.
Things you need
- Payslip or salary details
Make a list of all of the potential sources of automatic deductions from your salary. This doesn't include living expenses such as rent and food. In the UK, deductions usually include income tax, National Insurance Contributions (NIC) and pension payments. If you are a university graduate, include any student loan repayments.
Check the HM Revenue and Customs website for a full breakdown on how tax and national insurance is calculated. As a guideline, salaries of up to £37,400 (approximately £35,750) are taxed at 20 per cent, with a tax-free allowance of £6,475. This would result in approximately £6,000 in annual tax payments, or around £500 deducted from your gross pay per month.
Check your National Insurance Contributions. These vary according to salary and situation. However, for a salary of £37,400, annual contributions would be around £3,400 per year, or £290 from your gross monthly pay.
Calculate the amount you will pay into your pension fund or retirement plan. You should find the details in your contract or payslip. Include monthly or annual student loan repayment amounts.
Subtract all of these figures from your total gross salary amount. To arrive at a monthly figure, divide your annual salary by 12. The total is your net pay.
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