Everyone loves to hate it and its for that very reason that we advise you to employ the services of a qualified accountant to manage it for you!
The UK tax year runs from 6th April to 5th April the following year and there are 2 different types of tax that everyone has to pay: Pay as you Earn (PAYE) and National Insurance (NI).
PAYE is pretty simple – the more you earn, the more you pay. Your first £11,850 each year is tax-free. After that, you will be charged 20% from £11,850 to £46,350. If you earn over £46,350 you will be taxed at 40% and if you’re lucky enough to earn over £150,000 this rises to 45%.
National Insurance (NI) is the UK system whereby individuals make contributions to fund state benefits (such as the NHS and pensions). As an employee, you will have to pay NI contributions (NIC) if you earn more than £162 a week. You will pay 12% of your earnings above this limit and up to £892 a week. Over this, the rate drops to 2% of your earnings a week. Find out more about NI below.
If you are employed, your employer will deduct these taxes at source, with no involvement from you. However, if you have a Limited company you will need to complete a tax return.