Paying tax: Homes for Ukraine
The types of tax you will pay as an employee and how this could affect any benefits your claim.
The tax year in the UK begins on 6 April and ends on 5 April the following year.
This means that any income you get between these dates will be counted towards that tax year and how much tax and national insurance you will need to pay.
Income Tax
Income Tax is a tax you pay on your income. You are responsible for paying the right amount of income tax. It is a set percentage of your yearly income. You do not have to pay tax on all types of income.
You pay tax on things like:
- money you earn from employment
- profits you make if you’re self-employed, including from services you sell through websites or apps (page not translated)
- some state benefits
- benefits you get from your job
- income from a trust
- interest on savings (page not translated) over your savings allowance
You do not pay tax on things like:
- the first £1,000 of income from self-employment, (page not translated) this is your ‘trading allowance’
- Some state benefits like: (page not translated)
- Universal Credit
- Child Benefit (income-based, use the Child Benefit tax calculator (page not translated) to see if you’ll have to pay tax)
- Child tax credit
- Housing benefit
- Personal Independence Payment (PIP)
- Maternity allowance
Income Tax allowances and reliefs
Most people in the UK get a Personal Allowance of tax-free income. This is the amount of income you can have before you pay tax.
The amount of tax you pay can also be reduced by tax reliefs if you qualify for them.
How much Income Tax you pay in each tax year depends on:
- how much of your income is above your Personal Allowance
- how much of your income falls within each tax band
To find out if you’re paying the right amount of tax or to ask if you need to pay tax, contact HMRC.
Telephone:
0300 200 3300
Outside UK:
+44 135 535 9022
Opening times:
Monday to Friday, 8am to 6pm
Closed on weekends and bank holidays.
Get a tax refund or pay the tax you owe
If HMRC update your tax code and you’ve paid too much or too little tax, HMRC will send you a P800 or a Simple Assessment tax calculation. This will enable you to get a refund or pay what you owe.
Pay National Insurance contributions (NIs)
You pay National Insurance contributions so that you can qualify for some benefits and the State Pension. National Insurance is like social security. You pay mandatory National Insurance if you’re 16 or over and are either:
- an employee earning above £242 a week
- self-employed and making a profit of £6,725 or more a year
You need a National Insurance number before you start paying contributions. You can get a national insurance number.
Find out more information about National Insurance.
Employment status
Your employment status, such as self-employed or agency worker, can affect the amount of tax that you pay. The amount of tax you pay also depends on how much you earn. You can find out an estimate of how much tax you would pay on what you earn.
You can check your employment status here.
How you pay tax when you’re employed (Pay As You Earn or PAYE)
Most people pay Income Tax through PAYE. This is the system your employer uses to take Income Tax and National Insurance contributions before they pay your wages. Your tax code tells your employer how much to deduct.
Tax codes
Your tax code is used by your employer to work out how much Income Tax to take from your pay. HM Revenue and Customs (HMRC) will tell them which code to use.
Emergency tax codes
You may be put on an emergency tax code if you change jobs.
This usually happens if HMRC does not get your income details in time after a change in circumstances such as:
- a new job
- working for an employer after being self-employed
- getting company benefits or the State Pension
This means that you’ll pay tax on all your income above the basic Personal Allowance.
Emergency tax codes are temporary and HMRC will update your tax code when they get the correct details from your employer. If your change in circumstances means you have not paid enough tax, you will stay on the emergency tax code until this is paid.
How you pay tax when you’re not employed (Self Assessment)
If you are not employed by a company or another person but earn an income, you must declare that income and pay the right amount of tax. You do this on a Self Assessment tax return that you send to HMRC once a year.
Read more about Self Assessment and when you need to send them.
You’ll need to fill in a tax return every year.
More advice
For more advice you can contact: