Tax & NI in the UK

The UK tax year runs from 6th April – 5th April. For those working in the UK for the first time and planning to work through the PAYE (Pay as You Earn) income taxation scheme you will need to complete a P46 form.If you have worked in the UK before, you will need to provide our Payroll division with your P45 issued from your previous employer. If you do not have this, you will need to complete a P46. The P45 form provides us with information on your previous earnings, tax paid and tax code. We recommend that you keep copies of your P45’s (leaving certificates) and P60’s (end of year tax certificates) in a safe place as you will need these to complete your annual tax return and / or final UK tax return.

Income Tax rates and taxable bands

	2008-09	2009-10
Starting rate for savings: 10%*	£0-£2,320	£0-£2,440
Basic rate: 20%	£0-£34,800	£0-£37,400
Higher rate: 40%	Over £34,800	Over £37,400

* From 2008-09 there is a 10 per cent starting rate for savings income only. If your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply.

The rates available for dividends are the 10 per cent ordinary rate and the 32.5 per cent dividend upper rate.

National Insurance (NI)

If you work under the PAYE scheme your employer automatically deducts Income Tax and employee’s National Insurance contributions due from your gross pay. They will then pay the net amount directly into your account. As well as these deductions your employer will also incur a further cost to themselves of 12.8% of your gross salary to the Inland Revenue for employer’s National Insurance.

If you decide to work through a limited company it becomes the responsibility of that company to ensure that any Income Tax or National Insurance due is paid.

In order to work through the PAYE scheme you will need a National Insurance number. By law you must apply for an NI number as soon as you start working although you may be able to apply beforehand, depending on how busy your local DSS office is at the time.

Applying for a NI number

To apply for a NI number you will need to carry out the following:
Find out where your nearest DSS (Department of Social Security) is located by telephoning +44 (0) 845 600 0643 between 8.00am and 6.00pm, Monday to Friday Make an appointment with a local DSS office for a one-to-one confidential interview Don’t forget to take with you: Your passport Proof of UK address – Use your UK bank statement if you do not have a utility bill in your name Letters of appointment contract or pay slip confirming employment or letter outlining that you are seeking employment. For the latter, if you are registered with Martin Ward Anderson we can provide you with a letter of registration as proof that you are actively seeking work.

Remember - a National Insurance number is not proof of identity

There is more detailed information about National Insurance numbers on the HM Revenue & Customs website www.hmrc.gov.uk