Tax and national inc

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11-09-2012, 08:39 AM
Twinkle star

Tax and national inc

Hiya,

How do you work out how much tax and national insurance you pay per month? Once I'm up and running I'd like to pay it monthly but windering is there a percentage you work out based on what you've earned? Just so i can get a rough calculation :panic:
11-09-2012, 10:22 AM
MrAnchovy

For a fairly accurate estimate work out your profit for the month and take off £660. Multiply the result by 29%.

There isn't really any provision for making monthly payments, but lots of people do this and put the money aside in a building society account. Note that you will always have at least 4 months-worth in that account, and if your total bill is less than £1,000 for the year you will have 21 months-worth at the end of December each year.
11-09-2012, 10:41 AM
AgentTink

I work out how much i can earn roughly a month before i have to pay tax, and then whatever is left i then save 30% of that. I know this will be more as i have not deducted my expences from this amount however i would rather have more saved than get a nasty surprise at the end.

We are allowed to earn £8172 this tax year 2012/2013 before we pay tax.
We are allowed to earn £7605 this tax year 2012/2013 before we pay NI.

Tax is 20% and NI is 9% of your bring home salary after those allowances have been deducted and after your expences have been deducted.

For example you could earn £16,000 a year. Your expences may equate to £5000. This would mean that you have a figure of £11,000. The allowance is then taken off so £8172 for tax which leaves of £2828. 21% of this is going to be tax = £593. NI would be £11,000 minus allowance of £7605 leaves £3395 of which 9% is NI = £305.99. So in this instance your Tax and NI bill would be £898.

Beaware that if your Tax is over £1000, then you also have to pay half of the amount again on top of your tax bill to be put onto account for the following years tax bill in the January and the other half in July. There is a recent thread on this called Tax bill shocker that might be worth your reading to fully understand what this means.
11-09-2012, 10:57 AM
MrAnchovy

Quote:

Originally Posted by AgentTink

We are allowed to earn £8172 this tax year 2012/2013 before we pay tax.

It's £8,105 not £8,172 and if you are working with estimated figures it is much easier to combine the calculations and take 29% of profit over £150 a week / £660 a month / £8,000 a year.

Quote:

Originally Posted by AgentTink

Beaware that if your Tax is over £1000, then you also have to pay half of the amount again on top of your tax bill to be put onto account for the following years tax bill in the January and the other half in July. There is a recent thread on this called Tax bill shocker that might be worth your reading to fully understand what this means.

But if you put money aside each month, by the time you have to pay six months worth in January you will have saved ten months worth since April, that is why I said you will always have at least four months worth in the bank.
11-09-2012, 11:05 AM
AgentTink

Quote:

Originally Posted by MrAnchovy

It's £8,105 not £8,172 and if you are working with estimated figures it is much easier to combine the calculations and take 29% of profit over £150 a week / £660 a month / £8,000 a year.

But if you put money aside each month, by the time you have to pay six months worth in January you will have saved ten months worth since April, that is why I said you will always have at least four months worth in the bank.

Thanks for correcting my tax allowance figure. :)

As I said at the beginning of my thread i do save 30% of the amount over tax free allowance each month. I was just breaking it down into individual figures for the OP so that she was aware of how 30% is calculated. :)
11-09-2012, 03:13 PM
Twinkle star

Thank you for explaining it to me :)

We have worked out ish what we should be on for different amounts of children, just to make sure we can still pay the bills etc being self employed eek scary but soooo worth the change in careers :clapping:
11-09-2012, 07:44 PM
Babycat

Quote:

Originally Posted by AgentTink

I work out how much i can earn roughly a month before i have to pay tax, and then whatever is left i then save 30% of that. I know this will be more as i have not deducted my expences from this amount however i would rather have more saved than get a nasty surprise at the end.

We are allowed to earn £8172 this tax year 2012/2013 before we pay tax.
We are allowed to earn £7605 this tax year 2012/2013 before we pay NI.

Tax is 20% and NI is 9% of your bring home salary after those allowances have been deducted and after your expences have been deducted.

For example you could earn £16,000 a year. Your expences may equate to £5000. This would mean that you have a figure of £11,000. The allowance is then taken off so £8172 for tax which leaves of £2828. 21% of this is going to be tax = £593. NI would be £11,000 minus allowance of £7605 leaves £3395 of which 9% is NI = £305.99. So in this instance your Tax and NI bill would be £898.

Beaware that if your Tax is over £1000, then you also have to pay half of the amount again on top of your tax bill to be put onto account for the following years tax bill in the January and the other half in July. There is a recent thread on this called Tax bill shocker that might be worth your reading to fully understand what this means.

This is very helpful looking at it laid out this way :)