Any money that you are likely to earn
over £4,745 a year (£395.42 monthly or £91.25 weekly
(which is called the personal allowance - this is money
you are allowed to earn without paying any tax on it), is taxable under
the rules for income tax. It will be deducted weekly or monthly from your
earnings by your employer who gives it to the government on your behalf.
This system of National Insurance and Income Tax deductions made by an
employer is called the P.A.Y.E. (Pay As You Earn) system of tax deduction.
There are three bands of income tax. Your
taxable income is the amount you earn
minus the personal allowance.
So for example, if you earn £40,000
a year, your taxable income = £40,000 - £4745
(personal allowance) = £35,255
of taxable income.
||On the first £1 - £2,020 of taxable
||£2,021 - £31,400
||Any taxable income over £31,400
• The first £2,020 of your taxable
income is taxed at 10%.
• The next £29,380 is taxed at 22%.
• Any further earnings are taxed at 40%.
This means that if you earn £40,000
a year, the taxable part of your income £35,255 will be taxed as
First 2,020 x 10% = £202.00
The next £29,380 x 22% =
The final £3,855 x 40% = £1,542.00
Total Income tax that will be
If this sounds too complicated or you
want to double check your own calculations you can use this Online
Taxes in the UK are some of the lowest
in Europe. This is because the government gets more taxes from people
using a system of indirect taxation. The most common of these
taxes which is paid when you buy goods or services is called Value Added
Tax (VAT) and is included in the price of what you buy. It is currently
Most foods do not have VAT added.
The taxes on cigarettes, tobacco, beers,
wines and spirits, as well as on petrol are very high, so don't expect
these items to cost what they cost in your country.
Our construction recruitment agency advise
you that taxes are liable to change at any time, so this information comes
without a warranty of any kind.