tax for beginners
Taxable income includes: earnings from employment, earnings from self employment, most pensions, interest on most savings, income from shares, rental income and income paid to you from a trust.
tax-free allowances
Nearly everyone who is resident in the UK for tax purposes receives a 'Personnel Allowance', which is an amount of taxable income you're allowed to earn or receive each year tax-free.
This tax year (2012-2013) the basic Personnel Allowance - or tax- free amount - is £8, 105. You may be entitled to a higher Personnel Allowance if you're 65 or over.
If you're registered blind, or are unable to perform any work for which eyesight is essential, you can also claim the tax-free Blind Person's Allowance.
Tax for 2013-2014 is 9, 440.
This tax year (2012-2013) the basic Personnel Allowance - or tax- free amount - is £8, 105. You may be entitled to a higher Personnel Allowance if you're 65 or over.
If you're registered blind, or are unable to perform any work for which eyesight is essential, you can also claim the tax-free Blind Person's Allowance.
Tax for 2013-2014 is 9, 440.
how you pay income tax
Income tax is collected in different ways depending on the type of income and whether you're employed, self employed or not working. The different ways income Tax is collected include: PAYE (Pay as you earn). Self Assessment, Tax deducted'at source' whereby tax is deducted from bank/building society interest at the basic rate before the interest is paid for you.
national insurance contribution
As well as paying income Tax on your income, you'll also have to pay National Insurance Contributions. National Insurance Contributions build up your entitlement to certain social security benefits, including the State Pension. The amount of National Insurance you pay depends on how much you earn and whether you're employed or self-employed.
You stop paying National Insurance Contributions when you reach retirement age which is 67.
You stop paying National Insurance Contributions when you reach retirement age which is 67.
who pays national insurance
Class 1 - Payed through employer
Class 2 - Self employed
Class 3 - Voluntary National Insurance contributions (People aren't working in the country decide to pay them to keep up to date)
Class 4 - Self employed
Class 2 - Self employed
Class 3 - Voluntary National Insurance contributions (People aren't working in the country decide to pay them to keep up to date)
Class 4 - Self employed
how much national insurance you pay
Employed you pay Class 1. If you earn more £146 and up to £817 a week, you pay 12 per cent.
Class 2 is payed at a flat rate at £2,65 week.
Class 4 is paid when you earn £7,605 and £42,475.
Class 2 is payed at a flat rate at £2,65 week.
Class 4 is paid when you earn £7,605 and £42,475.
being both employed and self employed
You pay insurance on both jobs. The total amount of tax and National Insurance contributions you pay is based on your combined income from both jobs, you profits from self employment and any allowances or reliefs you get.