How much Federal Tax will I have to pay if?

How much tax will i pay?

  • I've just started work and I'm being paid weekly. Before this I was claiming Jobseekers Allowance and before that I was a university student so I'm a bit baffled about tax. I will be earning £180 a week so how much tax will I pay? Will it be the standard 20%? My friend was saying something about a low income threshold so I might pay less tax but does that apply to me? If it is only 20% tax, am I right in thinking that's £36 so I should be taking home around £144? It's so confusing! I tried calling HM Revenue but they used up all of my credit and refuse to call me back.

  • Answer:

    You have a single person's allowance before you start paying which is £6475. Tax is worked out monthly so you can earn about £540 per month tax free or £125 per week. So on £180 you will pay tax on the difference i.e. on £55 per week which at 20% is £11 so you should get a net of about £169 but they will take some National Insurance as well -11% of the amonut above £97 per week or 11% of £83 is about £9 so you should go home with £160 plus on minus a few pence.

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You do not pay tax if your annual total income is less than £6475. This is called the Personal Allowance. There are several tax bands but until you're promoted and earn lots of money you will only be concerned with the basic rate. You pay tax on the amount of income that you earn ABOVE the personal allowance at the following Basic rate: Annual income of £6476 to £37400 is taxed at 20%. If your total annual income is less than £6475 then you will not pay any income tax. You will also have to pay National Insurance contributions (what your parents probably called "The Stamp"). This is usually deducted from your pay by your employer. It will show up as NI on your pay advice slip. It's a bit more complicated than income tax. If you earn more than £110 a week and up to £844 a week, you pay 11 per cent of the amount you earn between £110 and £844. Your gross earnings are £180/week, which is £70 over the lower threshold. So YOU will pay 11% of £70, which is £7,70p. In your case I would expect the income tax to be around £12 per week and the NI to be about £8 so your total weekly deductions will be £20. Note that this may not always be exactly the same every week because of the way that employers calculate their payroll and deal with Her Majesties Revenue and Customs (HMRC). If you do the sums for a whole year you will find that it works out.

The Tank

roughly £577 a year in income tax this is not including council tax and national insurance

There's a neat little website (free and you don't have to register) where you enter your earnings and it automatically calculates tax and NI deductions: http://www.listentotaxman.com/

Jo W

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