I’m sure when you first look at this graph, it looks quite boring and complicated! But actually, it’s not that bad... ⭐️Net salary is salary after tax ⭐️Gross salary is salary before tax
It is important to know the difference as that can help you budget and give you an accurate idea of how much disposable income you have obtained!
On average a lot of people’s annual starting salary nowadays is £20,000, which is why I decided to use it as an example! ▪️the first thing you need to know is that everyone gets a personal allowance every year which is £12,500 and that’s tax free ▪️therefore, you would only pay tax for the difference which is £7,500 (20% basic rate) ▪️so the total tax due for payment is £1,500 ▪️you also have to pay National Insurance Contribution (which makes you eligible for state pension and various other benefits) at 12% after you earn more than £183 a week ▪️so the total NI Contribution for the year would be £1,260 ▪️therefore, once you subtract that from your overall salary of £20,000 that will give you a net salary of £17,240.
Hope you found that helpful!
Have a fab Saturday Hustlers!