Annex A: Calculating your Local Income Tax
This Annex contains some information to help you work out your liability. You need to know:
- what your total taxable income is for the year. This information is generally contained in documents such as a "P60"
- what your personal allowance is. For tax year 2008-09 the following personal allowances apply (please note that the following data are taken from the HMRC website):
Income tax allowances | 2008-09 (£) |
|---|
Personal allowance | 5,435 |
|---|
Personal allowance for people aged 65-74 (1) | 9,030 |
|---|
Personal allowance for people aged 75 and over () | 9,180 |
|---|
Married couple's allowance (born before 6th April 1935 but aged under 75) (1) (2) | 6,535 |
|---|
Married couple's allowance - aged 75 and over (1) (2) | 6,625 |
|---|
Income limit for age-related allowances | 21,800 |
|---|
Minimum amount of married couple's allowance | 2,540 |
|---|
Blind person's allowance | 1,800 |
|---|
(1) - These allowances reduce where the income is above the income limit by £1 for every £2 of income above the limit. They will never be less than the basic Personal allowance or minimum amount of Married Couple's allowance.
(2) - Tax relief for the Married Couple's allowance is given at the rate of 10 per cent.
Once you have this information you need to do the following:
Step one:
Deduct your personal allowance from your gross annual salary - that is the amount you get paid before any taxes have been deducted.
Step two:
Calculate 3% of this figure. One way of doing this is to divide the figure by 100, and then to multiply it by 3.
Example (2008-09)
- You have a gross income of £20,000.
- You deduct your personal allowance, which is £5,435, leaving £14,565.
- You then calculate 3% of this:
- £14,565 divided by 100 is £145.65
- £145.65 multiplied by 3 equals £436.95
- The amount of local income tax you will pay over the year will be £436.95. You pay income tax through PAYE and you are paid monthly, so your employer will deduct £36.41 a month from your salary
Warning
The above method only gives you an indication of the tax you will pay. The actual amount may vary slightly. This is because there is a range of different ways in which the amount of tax you pay can be affected. For example, if you donate money to a charity through the "Give As You Earn" scheme, then this money is deducted from your gross salary, and so reduces the amount of income tax you will pay. It is impossible for us to produce a user-friendly calculator that can take into account all of the possible variations on individuals' tax amounts.
You can get a more detailed idea of your likely local income tax by looking at your payslip to see exactly how much of your income is liable for income tax.
If you pay by self-assessment then you will be able to see your taxable income from your last tax return.
While accurate at time of publication, the information above may change due to the Budget on 12 March 2008.