Ok, can someone explain what a 20% Tax Rate means?

[Lisa O`Brien]

Started a new job as a care assistant. The pay is atrocious, but because I will be working 39 hours a week every week, it bumps up the money slightly. Someone there said we pay 20 per cent Income Tax. That seems awfully high for someone who is only going to be earing around £300 a week. My son said 20 per cent of £300 is around £67 a week. Can someone in the know tell me whether this sounds right, sort of? Seems like a huge chunk of my money, not even including National Insurance. Thanks.

[bangorballetboy]

There is a personal allowance that means, in most cases, that the first £11,850 is tax free.  You would pay 20% tax on anything over that.  You would probably be on PAYE (Pay as you earn) so the tax would be taken off by your employer when you get paid, so if you get paid monthly, the first £987.50 would be tax free and there would be a deduction of 20% above that.  You may be on an emergency tax code for the first month or so whilst the tax office sorts out your affairs, so the deductions may be a bit larger, but it gets worked out in the end.

 

National Insurance would be 12% on your monthly earnings above £702.

 

So, if you earn £1,200 a month, you would pay £42,50 income tax and £59.76 NI for that month.

[Nicola H]

what BBB says  those figures  sound  aobut right, also  don;t forget  the min 2 %  towards pension unless you have opted out 

[Lisa O`Brien]

Oh, many thanks for that !!

[munchkin16]

There’s a really helpful calculator if you google salary calculator UK. You can put in earnings and it will roughly work out the tax and take home pay per day, month, year, etc. Not an exact figure but can be useful if you want a rough idea and don’t want to do the maths! 

[Lisa O`Brien]

Thank you munchkin. Will take a look.

[Picturesinthefirelight]

The first thing to remember is that tax is cumulative, National Insurance is not.

 

As Bangorballetboy said you will have a personal tax allowance of £11,850, however because you have started work in the middle of the tax year you have 6 months worth of unused personal allowance so until April you may find that you are not stopped as much tax.

 

National insurance however will be stopped straight away for any month you earn over the Lower earnings Level of £702 per month.