Target Income Calculator

Whether you're an employee or a contractor, understanding how much you need to earn to meet your financial goals is important. Introducing our Target Income Calculator which is designed to help you figure out exactly how much annual income you need, to take home the income you want every month.

This calculator guides you in determining the exact annual salary you need to reach your desired monthly net income. If you're working as a contractor, the calculator also breaks down your contracting rate for both inside and outside IR35.

With this tool, you can plan your finances better, whether you're negotiating a salary, considering a new job, or simply want to ensure you're on the right track financially. Our required income calculator makes it easy to see the big picture and take control of your earnings.

What is a Target Income Calculator?

A Target Income Calculator is a financial tool that helps individuals, particularly contractors and employees, determine the gross annual salary or hourly rate they need to earn to achieve their desired net income after taxes and deductions. This is particularly useful for those who want to plan their finances accurately, negotiate salaries or contract rates, and ensure they’re earning enough to cover their living expenses and savings goals.

How does Our Target Income Calculator Work?

The Target Earnings Calculator works by taking the information you provide—your desired monthly net income, tax code, and tax year—and using it to estimate the gross annual salary you need. It takes into account the latest UK tax laws, including personal allowances and thresholds, to give you an accurate salary target.

For contractors, it calculates the hourly rate you should charge, both inside and outside IR35, based on your desired annual income. This helps you understand how IR35 impacts your earnings and ensures you set your rates appropriately, whether you're affected by IR35 or not.

To get the most accurate results, you'll need to provide a few key details:

• Desired Monthly Net Income: This is the amount of money you want to take home each month after taxes. This is your net income—the money you have available to spend or save.
• Personal Tax Code: Your tax code determines how much income tax will be deducted from your earnings. It’s based on your personal allowances and circumstances. If you’re unsure of your tax code, it’s usually found on your payslip or provided by HMRC.
• Tax Year: The calculator uses this to ensure it applies the correct and latest tax rates and rules. Typically, the tax year runs from April 6th to April 5th the following year.

Once you’ve entered this information, the calculator gets to work. It will calculate:

1. The annual salary you need to earn to achieve your desired monthly net income.

2. If you’re a contractor, the calculator provides you with two important figures:

• Contracting Rate Inside IR35: This rate applies if you’re working inside IR35, meaning HMRC considers you an employee for tax purposes. Your take-home pay may be lower, so it’s important to know this rate to plan accordingly.
• Contracting Rate Outside IR35: If you’re working outside IR35, you’re treated as a self-employed contractor. This rate reflects the higher take-home pay you can typically expect in this situation.

Why Use Our Required Income Calculator?

Accurate Salary Calculations:

Our required salary calculator provides precise estimates of the annual salary you need to achieve your desired monthly net income. By considering factors like your tax code and the current tax year, it ensures that the calculations reflect your actual financial situation. This accuracy helps you set realistic income goals, whether you're negotiating a new job offer, planning your budget, or assessing your current earnings.

Insight into IR35 Contracting Rates

If you're a contractor, understanding how IR35 affects your income is crucial. Our calculator goes beyond simple income calculations by giving you detailed insights into your contracting rates, both inside and outside IR35. This information helps you see the difference in take-home pay depending on your IR35 status, so you can make informed decisions about your contracts and career path.

Tailored to UK Tax Codes and Regulations

Our calculator is specifically tailored to the UK tax system, meaning it accounts for the latest tax codes and regulations. Whether you’re a full-time employee or a contractor, the tool adjusts to your individual circumstances, giving you results that are relevant and accurate.

Start Planning Your Financial Future with GoForma

Understanding your target income is a key step in managing your finances effectively. Our Target Income Calculator helps you see exactly how much you need to earn to meet your financial goals, taking into account your tax situation and IR35 status if you’re a contractor.

By knowing your target income, you can make more informed decisions about your career, budgeting, and long-term financial planning.

Don’t wait—start planning your financial future today. If you need more tailored advice, we're here to help. GoForma’s expert contractor accountants offer free consultations to help you optimize your income strategy. Whether you're unsure about your tax code, need guidance on IR35, or want to make the most of your earnings, our team is ready to assist. Book a free consultation today to take the next step towards financial success.  

Frequently Asked Questions on Desired Income Calculator

How accurate is the required salary calculator?

The calculator is designed to provide accurate estimates based on the information you provide. It uses the latest UK tax codes and regulations to calculate your required annual salary and contracting rates.

What if my tax code changes?

If your tax code changes, simply input your new tax code and recalculate. The tax code plays a significant role in determining how much tax you pay, so using the correct code ensures the calculator provides the most accurate results.

Can this calculator be used for different tax years?

Yes, the calculator can be adjusted for different tax years. Just select the relevant tax year from the options provided. This feature ensures the calculator applies the correct tax rates and rules for the specific year you’re interested in, whether you're planning ahead or reviewing past earnings.