As an employee within the United Kingdom, you will need to pay both income tax and national insurance on your wages.
Disclaimer: Tax figures are always open and to change and Her Majesty’s Revenue and Customs (HMRC) assesses everyone’s personal circumstances within personal tax codes and so this article is purely a guideline.
Every person is entitled to a tax-free Personal Allowance of £11,850 for the year (this is set to increase to £12,500 in the tax year of 2019-20).
In the UK, the tax system is based on marginal tax brackets. This means that the amount you are taxed is worked out based on the income you earn against certain thresholds.
As a UK employee:
Annual Salary (before tax) |
|
£30,000 |
£1,982 |
£40,000 |
£2,549 |
£50,000 |
£3,085 |
£60,000 |
£3,568 |
£70,000 |
£4,052 |
£80,000 |
£4,535 |
Please click here to work out your exact take-home pay with a salary calculator.
You may need to pay UK income tax on foreign income. For example:
This income includes anything from outside of England, Scotland, Wales and Northern Ireland.
You will also be required to pay a national insurance contribution on your earnings to help build your entitlement to certain state benefits, such as the State Pension and Maternity Allowance.
Dissimilar to income tax, national insurance is not an annual tax. You begin to pay National Insurance once you earn more than £162 a week and it applies to your pay each pay period (i.e.
Please note, your National Insurance contributions will be taken off along with Income Tax before your employer pays your wages.
If your Personal Allowance is spread out evenly across your wages for the year, then your tax and national insurance contributions should be taken before you are paid.
The UK Government
The money is used to help provide funding for public services such as the NHS, the education and welfare system as well as investment in public projects, such as roads, rail and housing.
When you open a UK bank account, you can also earn some income from your savings without paying tax.
If you pay a basic tax rate, then you can earn up to £1,000 in tax-free savings. Higher rate taxpayers can earn up to £500.
Moneyadviceservice.org.uk. (2019). How much Income Tax and National Insurance you should pay.
S, H. (2019). Tax Rates 2018/19.
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