National Insurance: What are NI and earnings tax and what do I pay? | EUROtoday

Income tax is paid on earnings from employment and income from self-employment in the course of the tax yr, which runs from 6 April to five April the next yr.

It can also be paid on some advantages, exterior and pensions, earnings from renting out property, and returns from financial savings, exterior and investments, exterior above sure limits.

The primary price is 20% and is paid on annual earnings between £12,571 and £50,270.

The larger price is 40%, and is paid on earnings between £50,271 and £125,140.

Once you earn greater than £100,000, you additionally begin shedding the £12,570 tax-free private allowance.

You lose £1 of your private allowance for each £2 that your earnings goes above £100,000.

Anyone incomes greater than £125,140 a yr not has any tax-free private allowance.

The extra price of earnings tax of 45% is paid on all earnings above £125,140 a yr.

These charges apply in England, Wales and Northern Ireland.

Some earnings tax charges are completely different, exterior in Scotlandthe place a brand new 45% band took impact in April 2024. At the identical time the highest price additionally rose from 47% to 48%.