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Tax and National Insurance contributions

Income tax: personal allowances

Not all income is taxable and an individual is only taxed on "taxable income" to the extent it exceeds the individual's income tax personal allowance for the tax year. There are other reliefs and allowances that can apply to reduce the amount of income tax payable.

Income tax: taxable bands

The taxable bands apply after any personal allowances (see Income tax: personal allowances).

National Insurance contributions

NICs are payable to HMRC by employees, their employers, and by self-employed workers. The amount of NIC payable is determined by multiplying the earnings or profits (plus certain non-cash benefits) of the employee or self-employed person by the relevant percentage or fixed rate. The rate will depend on the "class" (for NIC purposes) of the person and the level of earnings or profits. NIC is typically not payable below a prescribed earnings or profits lower limit, and is payable at a reduced rate, beyond a prescribed earnings or profits upper limit.