Current Tax Rates
As a permanent employee, your deductions are made before the money reaches your bank account. As a contractor, things are slightly different; it becomes your responsibility to take care of things.
With tax rates and allowances constantly changing, it can soon become confusing. We have taken the most common taxes and have looked at these in more detail.
Income Tax
Income Tax is a tax which is paid on the income you receive.
In the UK, you don't need to pay tax on any earnings under £12,570; this is known as your personal allowance. Once you start earning over this amount, you will begin to pay tax.
The amount you pay depends on how much you earn on a yearly basis, and can be found in the table.
Your personal allowance can begin to decrease when you earn over £100,000. Your personal allowance will decrease by £1 for every £2 over £100,000.
National Insurance
National Insurance contributions allow you to qualify for a range of benefits, plus the State Pension.
You will pay National Insurance if you're over the age of 16, and either:
- Employed and earning over £184 per week (£737 per month).
- Self-employed and making a profit of at least £6,515 per year.
However, if you earn between £120 and £170 per week, your contributions will be treated as having been paid. This protects your National Insurance record.
Any questions?
For guidance and advice regarding tax and your allowances, get in touch with our experts.
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