Our Methodology
Transparency is core to our mission. Here's exactly how we calculate UK taxes, with references to official HMRC guidance.
HMRC-Aligned Formulas
All calculations use formulas derived directly from HMRC guidance documents and official tax legislation.
Regular Updates
We update rates and thresholds within 24 hours of official HMRC announcements, including Budget changes.
Expert Review
All calculations are reviewed by chartered accountants before publication and after major updates.
Automated Testing
Our calculation engine runs thousands of test cases against known results to ensure accuracy.
Income tax is calculated using the following steps:
1. Determine Taxable Income
Taxable Income = Gross Income - Personal Allowance
Personal Allowance = £12,570 (standard)
Note: Reduced by £1 for every £2 earned over £100,000
Zero when income exceeds £125,1402. Apply Tax Bands
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
3. Calculate Tax
Tax = (Basic Rate Portion × 0.20)
+ (Higher Rate Portion × 0.40)
+ (Additional Rate Portion × 0.45)Employee National Insurance (Class 1) is calculated as follows:
Thresholds
| Threshold | Weekly | Annual |
|---|---|---|
| Primary Threshold (PT) | £242 | £12,570 |
| Upper Earnings Limit (UEL) | £967 | £50,270 |
Rates (2026/27)
Employee NI = (Earnings between PT and UEL × 8%)
+ (Earnings above UEL × 2%)
Employer NI = (Earnings above £5,000 × 15%)
- Employment Allowance (up to £10,500)Official Sources
Important Disclaimer
While we strive for accuracy, our calculators provide estimates for informational purposes only. They do not constitute tax advice. Your actual tax liability may differ based on your specific circumstances, allowances, deductions, and other factors. For official tax calculations, please consult HMRC directly or a qualified tax professional.
2026/27 Tax Year Updates
Updated all rates for 2026/27 including employer NI at 15%, £10,500 Employment Allowance, £3,000 CGT allowance
2025/26 Tax Year
Updated NI rates, employer NI threshold to £5,000, Employment Allowance increased
2024/25 Tax Year Updates
Updated NI rate from 10% to 8%, dividend allowance to £500, CGT allowance to £3,000
2023/24 Tax Year
Updated all rates for 2023/24 including frozen thresholds