Salary and Taxation Information at Redgoldfish® Jobs
 

Salary & Taxation

Income tax on Your Salary

Having secured your employment and negotiated your salary terms, the bad news is that HM Government will take some of it away from you the moment your first payday arrives.

It’s a historic thing you see, it all started back in January 1799 when the prime minister, William Pitt, Introduced income tax to pay for the Napoleonic war and started taking .83% off anyone earning over £60. Through the years these amounts have continually increased and new additional tax levels introduced, until the present day where we have a complex system of taxation in place.

Calculating Your Tax

Taxation is often taken at source and deducted automatically from your wages on a pay as you earn (PAYE) basis, often your employer will do this for you.

This link will take you to a tax calculator where you can enter your details and establish what your net take home pay is likely to be after tax.

In complex situations an accountant can assist you with checking your taxation but once you understand how the tax bands works it’s a fairly straight forward process for most individuals to work out.

UK income tax and National Insurance charges (2009–2010)

Income tax forms a large bulk of all revenues collected by the UK government.

As it stands, each person has an income tax personal allowance. This allowance is the amount that each person can earn each year that is free from tax. For 2009-10 the tax allowance for people aged under 65 is £6,475.

Above this income level there are a number of tax bands and each is taxed at a different rate

Rate (09-10)

Dividend Income

Savings Income

Other Income (inc employment)

Band (above any personal allowance)

Lower rate N/A 10% N/A £0 - £2440
applies if total income falls in this band
Basic rate 10% 20% 20% £0 - £37,400
Higher rate 32.5% 40% 40% over £37,400

This table reflects the removal of the 10% starting rate from April 2008. It was a very unpopular move by the current Prime minister but it still went ahead and now means that even if you are on a low salary you still get taxed at the standard rate. At the same time the 22% standard rate income tax rate was reduced to 20%.

During the 2009 budget (22 April 2009) the government also pushed for more taxation and decided to introduce a new 50% income tax rate level for anyone earning more than £150,000 from April 2010.

Your total income is assessed for tax with earnings from employment using up your personal allowance first. Then savings income (from interest or otherwise unearned) and then dividends are next to be taken into account.

For more details on taxation you can visit the HM Government website

 
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