Income Tax In Uk...

[chivo]

considering a move to london for a job there...

(i know, please spare the expected remarks! i said 'considering'...)

can you advise the income tax rates? is there national as well as city?

mainly , what percent of a salary will disappear...?

thanks

[QED]

There is only National Income Tax in the UK. You receive a annual tax free allowance depending on your status, then anything over that is taxed at 20% for the first 37,400 pounds, and 40% on anything above that.

You also have to pay National Insurance which is supposed to pay for the welfare system but is really just extra income tax - somewhere between 5 and 8% from memory.

What you refer to as 'City Tax' may be covered by Poll Tax (or whatever it's called these days), where you pay a set amount based on the value of your home for refuse collection, street lighting, policing etc, etc. Average amount would be about 1,500 pounds pa as a guesstimate, even on rented property.

Basically it's a rip off, but there are worse countries. More info: http://www.hmrc.gov.uk/incometax/index.htm

[Penkoprod]

There are just 2 rates of Income Tax in UK

For 2009 thos rates are 20% for income below around £34,000 PA, and a "higher rate" of 40% for earnings above that. Any portion of earnings above the £34,000 will be taxed at 40% , but only for that portion

These earnings figures rise each year.

Its further complicated by a system of "personal allowances" set to allow income below a certain ammount to be untaxed. This is currently around £6,000 PA before any tax is taken out.

In other words, if you earn £33,000 per year, you will be taxed on £27,000 only. So its roughly £5,500 direct Income Tax

There is no income (direct) tax other than that above (no "city tax" for instance)

But then there is the "National Insurance" scheme that nearly every worker pays. This is on top of, and seperate to any Income Tax paid.

It used to be said that, for every £3 earned, £1 goes on direct taxes and N.I.

I haven't worked it out in a while, but its now slightly less than that equation these days, but likely to rise from 2010 onwards, as the country tries to pull itself out of recession

There is a wealth of other indirect taxes you will pay after you get your earnings, though. Things like Council Tax, Value added (sales) Tax, Duties on a wealth of goods like car fuel, cigarettes, alcohol etc, etc.

It's said that each worker in the country works for the government until about late August each year. After that, everything he earns is his/hers.

*Edit

Just saw the post above (i was composing mine when it was made)

My figures are based on 2009/2010 levels

From year 2010/2011 however there is a NEW rate for those earning over £150,000 PA. This is set at 50%

http://www.direct.gov.uk/en/Nl1/Newsroom/P...t2008/DG_172915

Penkoprod

Edited November 23, 2009 by Penkoprod

[gregchambers]

bear in mind that if you started work in Jan you would still get the full 6000 quid personal allowance until the end of the tax year in April 5th, so if you were say earning 3000 a month you would only have to pay tax on 3000 quid (9000-6000) or six hundred quid plus the dreaded NI.

[chiang mai]

Presumably you are from the US? That being the case you may want to think about having a part of your salary paid outside the UK, if that's possible, given the role you are considering. You should also read HMRC6 which describes the circumstances under which UK tax is payable, just google HMRC6, it was published in August this year and it will present you with some options to consider.

[CharlieB]

There is another tax rate coming into force in April 2010. 50% for income above £150,000.

Edited November 23, 2009 by CharlieB

[bifftastic]

all good info in the above replies.

the City Tax you refer to is called 'council tax' and is not paid direct from your salary by your employer as is the case with most people regarding Income tax and National Insurance on the PAYE scheme (Pay As You Earn). If you're self-employed then you have an accountant and do your tax returns and pay your own NI. Usually pay too much and get a tax rebate towards the end of the financial year.

Council Tax is levied (as the name suggests) by the local council where you live, and is based on the value of your home (discount for living alone) and varies around the country. Mine (in London) is £73 a month. 1 bed flat (apartment). If you are renting then you need to contact them as soon as you can so they will allow you to pay in 10 monthly installments, if you miss a couple then they send you a nasty letter and make you pay the whole lot in one go.

Hope this helps.

[Mosha]

...and when they make a mistake, don't expect an apology.

[gregchambers]

depends on how long you are in the UK, arguably you could avoid both council tax and water rates (if no meter) merely by refusing to reply to the letters for a few months, but for sure after that they will get nasty - depends who you rent from as well. For the services received, council tax is about five times what it should be, and a huge proportion of the UK citizens don't pay it as their income is deemed not high enough, making it all the higher for those who actually go out to work and pay income tax.

[chivo]

appreciate the replies, everyone.

thanks

so the cut off for the higher tax rate looks like 150k pa.

so if one were lucky enough to be offered that as salary, you could ask for 149k and get away with the lower rate yeah?

[QED]

appreciate the replies, everyone.

thanks

so the cut off for the higher tax rate looks like 150k pa.

so if one were lucky enough to be offered that as salary, you could ask for 149k and get away with the lower rate yeah?

It soesn't really make any difference as you will only pay 50% on anything OVER 150k, so if your salary was 160k you would only be liable for 50% on 10,000 pounds.

[chivo]

ah,i see.

thanks for the good explanation QED!

cheers

[Bukseeda]

NI is 11%.

I pay £1000 council tax (local tax) on a one bed flat. If you live alone, you get a 25% discount.

[moobie]

When the new rate of tax kicks in next year for salaries over £150,000 per annum then the total tax off-takes (PAYE + NI) will be around 65% on earnings higher than that level.

However a further point for consideration, if you are from outside of the European Union or have no means to an Ancestry visa, etc. may find that you are not legally allowed to work in the UK anyhow. Any potential employer is supposed to show that the vacancy cannot be filled by either a national or an EU citizen prior to awarding it to somebody from outside of this criteria.