The tax system in the UK can be quite confusing. In order to avoid mistakes or even penalties, it is necessary to know certain information about what taxes you have to pay, how much, how and when.
In addition, understanding the UK tax system makes tax refunds easier to understand.
Tax system in the UK and National Insurance contributions. All people in the UK, especially those that work, must have a National Insurance Number (NIN), which can be obtained at the Job Center. This number is assigned to a person for life and is like a personal code that shows how much National Insurance Contributions (NIC) a person has paid.
NICs are designed to create a person’s right to benefits and a state pension. The size of the contributions depends not only on the salary per year, but also on how you work – employed or self-employed. However, people of pensionable age in Great Britain do not have to pay National Insurance contributions.
NICs may be payable even if you are not working or receiving benefits. You can also pay these contributions if you live outside the UK but want to keep your rights to a state pension or other British social benefits.
National insurance contributions are divided into 4 classes:
- I klasės NIC iš darbuotojo algos atskaičiuoja darbdavys, jeigu žmogus yra įdarbintas (employed). Įmokų dydis priklauso nuo darbuotojo algos.
- II klasės NIC moka savarankiškai dirbantieji. NIC įmoka yra fiksuota – 2,65 svaro per savaitę.
- III klasės NIC mokamas, jei turėjote nedarbingumo periodą, tačiau norite, kad jis skaičiuotųsi kaip darbo stažas. Įmokos dydis – 13,25 svarų per savaitę.
- IV klasės NIC moka savarankiškai dirbantieji, jei jų atlyginimas per metus viršija 7604 svarų.
Income tax is paid by all working persons, whether employed or self-employed. If the earned income is below the tax-free minimum (it changes every year), it is possible not to pay income tax. When the amount of money earned exceeds the limit of tax-free income, you start paying income tax. The amount of taxes depends on the amount of income received, i.e. the more you earn, the more tax you have to pay.