Alongside opening up a bank account, setting up the correct tax code and national insurance number is crucial when starting a new job in the UK. You will have to pay income tax when you start earning, for most new arrivals to the UK this means money you earn from employment.
Income Tax
How much income tax you pay each tax year depends on how much of your income is above your Personal Allowance and which Tax Band you enter, the tax year begins on the 6th of April each year.
The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. After this you will enter one of the below Tax Bands.
| Band | Taxable income | Tax rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
National Insurance
National Insurance contributions are a tax on earnings and self-employed profits paid by employees, employers and the self-employed. The payments became law with the introduction of the National Insurance Act 1911. National Insurance contributions are paid by UK workers and employers in order to fund state benefits such as State Pension and the National Health System (NHS). Some social security benefits will be dependant on payment of sufficient National Insurance Contributions
Tax Refund
If you only work in the UK for a few months you may have paid too much tax, This is because your contributions are divided based on you working 12 months.
We suggest using a qualified accountant to handle this process as it can become quite complex. These experts will take away the hassle and deal with your tax affairs in a professional manner. This includes income tax refunds, completing your tax return, calculating the total refund, dealing with HMRC on your behalf and being available for all queries and questions you may have.
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