How much tax will I pay?

For an employee, it is important to understand the tax structure, as an imprecise understanding of the structure can lead to the usage of the wrong tax code and incorrect tax payment. Each employee pays income tax and National Insurance (NI) on the wages through the pay-as-you-earn system (PAYE) system. At the same time, it is not viable to expect owner-managed businesses to have an exhaustive knowledge of the tax structure and National Insurance rules. DNS Accountants, with years of experience, can help businesses with their tax planning and computation of tax and NI contributions.

HOW MUCH TAX AND NI WILL I PAY

Self-employed individuals pay income tax on business profits and after a self-assessment tax return is filed, the tax is due on profits generated during the prior 12-month accounting period. The self-assessment tax return must be completed each year. Individuals must also pay Class 2 NICs and Class 4 NICs. For 2016-2017, Class 2 NICs works up to a flat-rate of £2.80 per week which is collected by means of self-assessment. Class 4 NICs are linked to profits and for 2016-2017, the lower and upper limits are is £8,060, and £43,000 respectively.

If you are as an employee: you pay 0% on incomes up to £11,850* (£12,500 for 2019-20) then you pay 20% on anything you earn between £11,851 and £46,350 (£12,501-£50,001 for 2019-20) you'll pay 40% Income Tax on earnings between £46,351 to £150,000 (£50,001-£150,000 for 2019-20)