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Once you get a job in the UK, you may have to pay taxes depending on how much you earn and what your employment status is, for example if you’re self-employed or on a permanent staff contract.
In the UK the Government – through Her Majesty’s Revenue and Customs (HMRC) – collects taxes from the public.
Income tax is the main form of tax on your salary, but you could also find yourself paying National Insurance contributions. So what are they, how much will you pay and what does this go towards?
What is Income Tax?
How much Income Tax you pay in each tax year depends on:
- how much of your income is above your Personal Allowance (which is currently £12,570)
- how much of your income falls within each tax band
If you earn more than £12,570, there are three tax bands your salary will fall into.
If you earn between £12,571 and £50,270, you will be on the basic rate of income tax which is 20%. The higher rate of 40% is for those who earn between £50,271 and £150,000, while those earning more than £150,000 will pay 45%.
The amount of tax you pay depends on how much you earn. You can check this on the GOV.UK website.
What is National Insurance?
You will also have to pay National Insurance contributions to qualify for certain benefits and the State Pension.
This payment is mandatory if you’re 16 or over and are either:
- An employee earning above £184 a week
- Self-employed and making a profit of £6,515 or more a year
More information on National Insurance can be found on the GOV.UK website.
You pay National Insurance contributions to qualify for certain benefits and the State Pension. You pay mandatory National Insurance if you’re 16 or over and are either: • An employee earning above £184 a week • Self-employed and making a profit of £6,515 or more a year More information on National Insurance can be found on the GOV.UK website at: National Insurance.gov.uk
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