Tax & National Insurance

Sadly, the only certain things in life are death and taxes. It's depressing to think of someone taking a chunk of your hard-earned money, but tax helps pay for stuff for you and others like:

- Healthcare
- Education
- Defence
- Social security
- Transport

What's National Insurance?

National insurance (NI) is your contribution to your government pension fund, so you can live your later years in comfort - or that's the plan anyway.

What's taxable?

- Earnings from work, including tips and bonuses

- Jobseeker's allowance

- Interest on your savings

- Dividends from shares in a company

How do I hand it over?

- If you've got a job, your employer usually gives your tax straight to the tax office

- If you're self employed, you'll need to complete a self assessment tax return and pay the tax office yourself

- Banks and building societies take tax from the interest they pay to savers and hand it over to the government

- If you change jobs, you'll get a P45 from your employer to give to your new boss

How much are they going to sting me for?

- The first 5,035 you earn is tax free

- The next 2,090 is taxed at 10%

- 2,091-32,400 is taxed at 22%

- Earnings over 32,400 are taxed at 40%

What should I do if they take too much or too little tax?

- At the end of the tax year, you'll receive a P60 form with what you've earned and how much tax you've paid

- If you've paid too much, you'll get a cheque in the post

- And if you've paid too little, they usually increase your deductions in the next tax year

Do I have to keep records?

Yes, it's important. Keep:

- Anything from the tax office

- All your payslips

- Details from the Benefits Agency about any taxable social security benefits you claim

- Info from your bank or building society about any benefits you claim

- Comprehensive records if you've got your own business. See the starting your Own Business section

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