All UK employees are obliged to pay for the Tax by National Insurance and Income Tax. Their famous system, known as PAYE, gives the wages according to employees’ rank. It is essential to check the correct tax code and know that if you are paying the right tax amount or not as a responsible citizen. In this article, I am going to discuss how much Tax you have to pay to National Insurance and Income Tax if you earn an annual salary of £40,000. As a responsible citizen, paying Tax is essential. So, don’t you think that paying Tax is a waste of money because it is the money of government that is right or every country?
Is it necessary to pay Income Tax and National Insurance in the UK?
As we know that every person earns a certain amount of income every year, and this income is called Personal Allowance. You have to earn a certain amount of income before you need to pay any kind of income tax. A tax year in the UK runs from April 6 to April 5. And in general, not everyone has the same personal allowance for the tax year of 2020-21, which is around £12,500.
Personal Allowance is the fixed amount of money that is set against your gross income. Before Tax, your income and any other deductions are taken, which allows the individuals to receive that much income free of Tax in a tax year. Every responsible citizen, no matter in which part of the world or country they are living in, if loyal to their land pay the Tax. Tax is essential that makes a country prosper and work properly without any economic loss.
How much you need to earn to pay income tax in UK?
The tax system in the UK is based on marginal tax rates, which means everything is worked out as a percentage of income you earn inside thresholds. You don’t have to pay the same amount of tax on everything you earn, and it actually depends on their rate and how much government or company benefits from it.
In the UK, as an employee, you pay 0% on earnings up to £12,500* for 2020-21, and then you pay 20% on anything you earn between £12,501 and £50,000. After that, you will pay a 40% Income Tax on earnings between £50,001 to £150,000 and in case if you earn £150,001 and over you pay 45% tax. To explain it simply, if you earn £1,000 a week, for example, you pay nothing on the first £183, 12% (£93.48) on the next £779 and 2% (£0.76) on the next £38. In the further article, I have given the break down of £40,000for income tax.
How much Tax do you need to pay for £40,000?
Are you earning £40,000 annually? Do you know how to pay the Tax in the UK and how much you need to pay on the income of £40,000? Many Tax calculators help you calculate the income tax that is also known as PAYE and national insurance that will be taken from your salary per week, per month and per year. All you need to do is just enter your salary in the calculator to view the tax deductions and take the rest of the money home. They help you figure out exactly how much money you are left with at the end of the month.
In case if your salary is £40,000, you will be left with £30,580.89 after Tax and national insurance. This means that after you pay Tax, you will take at least £2,548.41 home per month. This makes £588.09 per week, £117.62 per day. Your hourly rate will be £14.70. All these figures are according to £40,000 per year. These figures may vary according to your annual income and allowance.