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How Much Tax do I Have to Pay?

By: J.A.J Aaronson - Updated: 27 May 2018 | comments*Discuss
 
Tax Bands Paye Income National Insurance

In a life full of financial uncertainties, there is one thing that you can cling to as an absolute fact: the taxman will always be trying to take money off you. How much tax you have to pay, however, is dependant on a number of different factors.

National Insurance

In the first instance, it is important to recognise that there are two distinct payments which you will normally be required to make to the government. The first is National Insurance.

These are contributions that individuals make to the public purse, in order to guarantee their right to state-run welfare facilities. National Insurance is different from general taxation in several key ways: primarily, although levels of contribution are staggered, the access to benefits is not means tested. Furthermore, employers also make a contribution for each of their employees, based on the size of contribution being paid by the latter.

National Insurance contributions are divided into Classes, ranging from Class 1 to Class 4. If you are an employed person, you are likely to be required to make Class 1 contributions. This means that, if your gross wage is over the Earnings Threshold, currently set at £157 - £866 per week, you will pay 12% of your income in National Insurance Contributions, or NICs. Furthermore, if you earn over £866 per week, you will pay another 2% of everything you earn over that figure. As an employed person, it is the responsibility of your employer to pay your contributions out of your wage.

For the Self-Employed

If you are self-employed, the National Insurance system is slightly different. In this case, regardless of your income, you will pay Class 2 NICs at a flat rate of £2.85 per week. On top of this, you will be required to make Class 4 contributions of 9% of your income between £8,164 and £45,000. On earnings over this higher figure, you should be making contributions of 2%. You should also bear in mind that, if your income is less than £6,025, you can apply for a Small Earnings Exception, which exempts you from Class 2 contributions.

Income Tax

Aside from National Insurance, you will also pay income tax. Everyone has an annual non-taxable allowance of £11,500 (6 April 2017 to 5 April 2018). If you are employed, then you will pay tax on earnings over this allowance as follows: 20% up to £45,000, 40% between £45,000 to £150,001, and 45% on everything over £150,000. Your income tax will be automatically deducted from your wage if you are signed up to a PAYE scheme.

If you are self-employed, the income tax system operates slightly differently. In these cases, you will be required to fill in a Self Assessment, which involves giving details of all of your taxable earnings from the previous year. From this, HM Revenues and Customs will calculate how much tax you must pay. You will pay tax at the same rate as employed people; the difference is that your payments are not deducted as you earn.

Please note that these figures apply to the 2017-18 tax year.

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[Add a Comment]
I have recently retired and I have just received my first month of a nhs pension which should be £440 per month and I am not receiving any other pensions as not old enough to qualify for state pension yet. I have been taxed £89.20 on my first month surely that is wrong as I thought I wouldn't pay any tax on a pension that small
Annie - 27-May-18 @ 5:14 AM
Hatrick - Your Question:
I started working full time permanent for a mail company last year, November. In the month of April I did some overtime, I was supposed to get this month around 2200£ after taxes being taken but I only got 1800£, when I check my pay slip I saw that it was taken from me around 450£ for taxes, is this normal??

Our Response:
You have paid too much tax. You may wish to speak to your employer and/or HMRC regarding this matter. You will be able to claim this back.
MoneyExpertise - 24-May-18 @ 3:04 PM
I started working full time permanent for a mail company last year, November. In the month of April I did some overtime, I was supposed to get this month around 2200£ after taxes being taken but I only got 1800£, when I check my pay slip I saw that it was taken from me around 450£ for taxes, is this normal??
Hatrick - 23-May-18 @ 10:05 PM
Hem68 - Your Question:
Im reducing my hoursnext month I will be losing nearly 2000 a year If my earnings drop to 11 480 will I stop paying tax

Our Response:
Yes, you will stop paying tax. Your annual personal tax allowance for 2018/19 is £11,850. Once you earn over this amount, you will only be taxed on any income you earn above this figure.
MoneyExpertise - 21-May-18 @ 12:28 PM
Im reducing my hoursnext month i will be losing nearly 2000 a yearIf my earnings drop to 11 480 will i stop paying tax
Hem68 - 19-May-18 @ 10:18 AM
5kts - Your Question:
Hi. I’ve tecently started a new job only been there a 2 months, I’m working part time averaging 16-18 hours a week, on minimum wage, each week I’m being taxed roughly around £30-£36 a week. is that right? It says PAYE on my payslip

Our Response:
If your tax code has ‘W1’ or ‘M1’ at the end, these are emergency tax codes, please see link here . This means that no tax free allowance is available, and all income received will be taxed at basic rate ( BR ) which is at 20%. You can talk to your employer directly regarding this matter.
MoneyExpertise - 17-May-18 @ 2:10 PM
I currently work approx 20 hours a week. A year I earn approx 7600. I have been offered a second job, it's just once a week for 5 hours so roughly 40 a week. This second job is cash in hand. How much tax and national insurance would I be paying for the second job? Just need to make sure it's worth it before agreeing to it.
Jessilou - 15-May-18 @ 11:03 PM
Hi... I’ve tecently started a new job only been there a 2 months, I’m working part time averaging 16-18 hours a week, on minimum wage, each week I’m being taxed roughly around £30-£36 a week... is that right? It says PAYE on my payslip
5kts - 15-May-18 @ 8:03 PM
Charmc86 - Your Question:
I have recently gone self employed and I am being contracted work from a local company. I am paid £150 a day, but only doing one or two days a week due to family commitments making my income around £7200 a year. I can’t figure out how much to keep for national insurance and tax, can someone please advise? I am 25 years old. No other jobs other than this one. Thank you.

Our Response:
You wouldn't pay any tax on this amount. You would only pay tax once you earn over £11,850 per year. You will have to register for self-assesment, which in this case is a formality so HMRC have a record for your earnings. You can see more about self-employed NI rates via the link here.
MoneyExpertise - 14-May-18 @ 2:48 PM
Jj - Your Question:
Just started a new job, and have only been working for a month and I work four days a week, for 12 hours each shift and pay rate of 7.88 and its my very first job,will I get taxed and national insurance for it

Our Response:
You will only pay tax if you earn over £11,850 per annum (which is considered your annual personal tax allowance).
MoneyExpertise - 14-May-18 @ 11:24 AM
Just started a new job, and have only been working for a month and I work four days a week, for 12 hours each shift and pay rate of 7.88 and its my very first job,will I get taxed and national insurance for it
Jj - 13-May-18 @ 3:19 PM
I have recently gone self employed and I am being contracted work from a local company. I am paid £150 a day, but only doing one or two days a week due to family commitments making my income around £7200 a year. I can’t figure out how much to keep for national insurance and tax, can someone please advise? I am 25 years old. No other jobs other than this one. Thank you.
Charmc86 - 11-May-18 @ 12:53 PM
Rush - Your Question:
My son gets payed £320 a week and he has been getting taxed £160 on that wage is this right for an18 tear old and what should his tax allawance be

Our Response:
If he on an annual salary of over £11,850 (personal tax allowance) then he will pay 20% tax once his tax allowance has been factored in.If he is earning £320 per week across 52 weeks per year, then he should pay approximately £18 per week tax. Therefore, he would need to contact HMRC to get his tax code changed.
MoneyExpertise - 11-May-18 @ 11:29 AM
My son gets payed £320 a week and he has been getting taxed £160 on that wage is this right for an18 tear old and what should his tax allawance be
Rush - 10-May-18 @ 8:07 AM
Hi, I was made redundant in March and got paid for the month. I am now employed as a contractor for a consultancy company. I will earn approximately 13k in a 6 month contract. I have looked at the HMRC website and know that the tax free allowance is £11,500. Does this mean I only need to pay NIC and not income tax on this income as I don't know what my situation will be in 6 months. Thanks
Caffery - 8-May-18 @ 8:45 PM
Atz - Your Question:
HiI worked off 4 years to a company and I always played more than 120 pounds for tax. My salary was usually under then 1200 pounds per month.I had 0hours contract.Didn't I pay too much tax for years ?My tax code is normal

Our Response:
Paying tax at £120 on a monthly salary of £1200 (and under) is too much. The tax office will look at claims up to four years old if you made a mistake, but if it is the fault of HMRC you may be able to get this time extended. You would have to take this up with HMRC directly.
MoneyExpertise - 1-May-18 @ 9:27 AM
Hi I worked off 4 years to a company and I always played more than 120 pounds for tax. My salary was usually under then 1200 pounds per month. I had 0hours contract. Didn't I pay too much tax for years ? My tax code is normal
Atz - 30-Apr-18 @ 3:50 PM
Student - Your Question:
Hi, please can you help? I earn £1,250 per month but I’m only on a contract until the end of August and then I return to Uni. Is there anyway I can avoid paying £52 of tax each month as I really need the money to live off now, rather than waiting until next April to reclaim the tax.

Our Response:
You can see more via the link here , which should tell you all you need to know.
MoneyExpertise - 30-Apr-18 @ 12:51 PM
Lou - Your Question:
My husband is self employed so doing his self assessment. Hes subcontracted so pays 20% tax out of his wages. Is any of this amount for his class 4 national insurance contributions?? Getting rather confused by it all. Thanks

Our Response:
If your husband is a sub-contractor, he is looked at via HMRC as an employee. The payment of income tax and National Insurance will be the responsibility of the main contractor to pay on his behalf. You can see more via the gov.uk link here for further information.
MoneyExpertise - 30-Apr-18 @ 12:39 PM
Hi, please can you help? I earn £1,250 per month but I’m only on a contract until the end of August and then I return to Uni. Is there anyway I can avoid paying £52 of tax each month as I really need the money to live off now, rather than waiting until next April to reclaim the tax.
Student - 29-Apr-18 @ 10:39 PM
My husband is self employed so doing his self assessment. Hes subcontracted so pays 20% tax out of his wages.... Is any of this amount for his class 4 national insurance contributions?? Getting rather confused by it all. Thanks
Lou - 29-Apr-18 @ 9:21 PM
Cal- Your Question:
I earn 23,000 per year pre sales bonuses. Does this mean I won't be taxed for the first 11k but will be after or is it calculates pro rata

Our Response:
It will be calculated pro-rata on £11,141 which is your approximate taxable wage once your annual personal allowance has been deducted from your £23K salary.
MoneyExpertise - 27-Apr-18 @ 3:26 PM
Working mum - Your Question:
I haven't worked for over four years and I started a job on 19th March my tax code on pay slip is s1150L I'm due to get paid again on the 30th of April I should earn £1394 how much will I be taxed

Our Response:
You'll pay approximately £81 per month in tax on this salary. If your salary is £16,728, then you will be allowed a tax free allowance of £11,859, and pay tax on the remaining £4,869.
MoneyExpertise - 27-Apr-18 @ 2:10 PM
I earn 23,000 per year pre sales bonuses. Does this mean I won't be taxed for the first 11k but will be after or is it calculates pro rata
Cal - 27-Apr-18 @ 5:32 AM
Albano Aiello - Your Question:
Hello, if I'm earning £80 per week, need I to pay any tax? Thanks

Our Response:
The standard Personal Allowance is £11,850 (2018/19), which is the amount of income you don’t have to pay tax on. You only have to pay tax on anything you earn over this in the year. If your annual salary is less than £11,850, then you will not pay tax.
MoneyExpertise - 26-Apr-18 @ 3:32 PM
Hello, if I'm earning £80 per week, need i to pay any tax?. Thanks
Albano Aiello - 26-Apr-18 @ 1:59 AM
jamie - Your Question:
I was employed from start of tax year to December. then went self employed. earnt 8000 from employed paye done tax and no. then self employed earnings was 6110 until end of tax year (before my 20percent tax deduction). Will I get some of that tax back im confused. done self employed for a whole tax year before on similar earnings and use to get some tax back

Our Response:
It usually tells you as soon as you fill in your tax return whether you are owed tax. The tax rebate you had initially may have been from your employed status.
MoneyExpertise - 23-Apr-18 @ 11:30 AM
I was employed from start of tax year to December.then went self employed. earnt 8000 from employed paye done tax and no. then self employed earnings was 6110 until end of tax year (before my 20percent tax deduction) . Will I get some of that tax back im confused . done self employed for a whole tax year before on similar earnings and use to get some tax back
jamie - 22-Apr-18 @ 1:25 PM
I haven't worked for over four years and I started a job on 19th March my tax code on pay slip is s1150L I'm due to get paid again on the 30th of April I should earn £1394 how much will I be taxed
Working mum - 20-Apr-18 @ 5:06 PM
Hi there. I am wondering how much you need to earn in 6 months (as I have a 6 month contract only) before paying tax and how much national insurance I would pay. All the websites only give a tax and N.I payment based on 12 months or weekly, however my weekly hours increase for 9 weeks in the summer which is why I cannot do a weekly calculation. Thank you
Tiffany - 20-Apr-18 @ 3:02 PM
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