Over the coming weeks the HM Revenue & Customs will be sending new tax codes to all UK employees.
After personal allowances there are 2 income rate bands:
– 20% up to £36,000 annual gross income
– 40% over £36,000 annual gross income
Form more information you can visit the HMRC website.
Not sure what ‘personal allowance’ means or how to calculate your taxable income? Here’s an example to help you: say your salary is £50,000 before tax. You pay no tax on your personal allowance (for the 2008-2009 tax year, the standard personal allowance for under 65-year-olds is set at £6,035). That leaves £43,965. You would pay 20% on the next £36,000, which would come to £7200 tax. That leaves a remaining £7965 on which you would be paying 40% tax, making the total tax deducted £10,386 and your NET salary £39,614.
What happens if you are not registered with the Inland Revenue? You get a temporary insurance number which is used to establish your tax level. So, before getting your NI number you may well pay too much tax but you can apply for a rebate from the IRS, providing you attach your P60 and payslip of April last tax year and include the reference number of your company and your temporary NI number.
So what happens if you are a resident in another country and you work here? Or if you work abroad but live here? Answers are coming… Keeping checking your daily blog on London Presence for more business advice.