Tax Computation for a Salary of £200,000 per Annum

Personal tax computation		2009/2010		2010/2011
		£		£
Salary		200,000		200,000
Personal allowance		6,475		-
Taxable income		193,525		200,000
Basic rate		7,480		7,480
Basic rate extension		2,500		2,500
Higher rate		57,450		45,040
Additional rate				18,750
Tax liability		67,430		73,770
National Insurance
Employee contributions		5,968		5,968
Employer contributions		24,868		24,868
Net pay		116,602		110,262
Percentage Retained by Individual		58%		55%

Comments

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Instructions and Assumptions

1. No account has been taken of the savings rate as all income is salary.

2.The computations can calculate the relief on pension contributions up to £20,000 per annum (or pension contributions exceeding this amount that are paid at least quarterly at the same rate the individual applied prior to 22 April 2009). Please note that with effect from 6th April 2011, higher rate relief on pension contributions will be restricted for individuals with income exceeding £150,000 per annum.

3. For simplicity the computation works for income levels above the earnings threshold only.

4. Prospective amendments to section 192 Finance Act 2004 suggest that the extension of the basic rate band on granting further tax relief for pension contributions does not simply cause more income to be taxed at the 50% rate. This computation has been calculated on this basis.