Tax

  

What is income tax?                             

Income tax is a tax on income.                                                                                                                                                                                    

Do I have to pay income tax?                           

Everyone who works in the UK must pay income tax. Your employer will automatically deduct income tax from your salary, along with National Insurance.                                                                                                                             

How much will I pay in income tax?

The UK tax year runs from 6 April to 5 April of each year.  Single people during the 2008/09 tax year receive a tax-free personal allowance of £5435.  Income tax is then deducted at the following rates:

Tax Bands Basic rate 20% 0 - 36,000 Higher rate 40% Over 36,000

Worked example:
If you have a job with a salary of £45,000 per annum, you will pay £8,626 in income tax.  Your actual take-home salary will be £36,374

Earnings £45,000 Minus personal allowance £5,435 Tax will be charged on £39,565 Minus tax at the following rates: Basic rate at 20% on £36,000 £7,200.00 Higher rate at 40% on £3,565 £1,426.00 Tax payable: £8,626.00

More information is available on the Inland Revenue website www.inlandrevenue.gov.uk.