Understanding UK tax
If you are moving to the UK with the intention to work and are being paid by a UK company in the pound, you will be taxed on your earnings. The UK Tax system can seem intimadating but it is easy to get your head around. We are here to help.
Taxes in the UK are collected by HM Revenue and Customs. The UK tax year runs from 5th April through to the 4th April which is unlike many countries that run from 1st January through 31st December.
The UK tax system is fairly straight forward as there are no deductions if you are an employee. This does get more complicated if you own your own business.
Firstly, you need to work out where you will be paying tax, either in the UK or in your home country (hopefully not in both places). This is generally determined by the amount of time you stay in the UK. Do take a look at this or have a chat with your accountant from home to make sure when you return to your home country, you qualify for an exemption from your home countries taxes.
The good news is if you are on a salary and your tax is taken automatically from your payments and you do not need to complete a Self Assessment Tax Return (woo hoo). This means that you have been ‘Taxed at source’ meaning the cash you have has already had the tax taken from it. This is the payment you would get under the Pay As You Earn (PAYE) system.
Income tax rates
The majority of us will pay tax before we see our money hence we don’t have to submit tax documents. The amount you pay is a percentage based on your income.
£0 – £31,785 per annum = 20%
£31,786 to £150,000 = 40% (those on a personal allowance rate pay 40% on income over £42.385. Standard is paid on the rest.
£150,000 and over – 45% on additional over the standard
*Please note this may change so always refer back to the HM Revenue and Customs sources.
There is an additional tax which foreigners should be aware of called the National Insurance (NI) this is a number, much like a Social Security number or Tax File number. You will need this to work and to get paid. To find out how to apply for an NI see this article.
The NI is paid to subsidise social security benefits. This includes state pensions, job seekers allowance, maternity benefits. While it is not useful to most expats it is a part of working in the UK.
Double check that your employer is paying your NI. This can be done through your employer’s accountant.
To apply for the NI you will have to already be in the country and you must have the right to study or work in the UK so make sure that you have a copy of your valid passport and visa.
Do keep an eye out in case you qualify for a Tax Refund. This means that you were making overpayments to the HMRC. This is possible if:
You work more than one job
You change jobs frequently
You have not been working
Working with a temporary tax number
Are about to leave the UK.
The provides all the information you need to understand the British tax system. In addition, free help can be found at – either online or in person. While it is not mandatory for many people to employ an accounting firm to handle their financial affairs, it can be the answer if you don’t have the time or inclination to deal with it yourself.
The Tax Website does have a lot of additional and detailed information regarding Tax. You can here.
Apply for an NI number
An NI number is needed if you want to work in the UK.
For more info on moving to the UK take a look at our .
Government Website –
HM Revenue Customs –
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