It’s quite simple… if you are going to be earning money in the UK you’re going to have to pay tax. Read on below to find out the details and how we can help you.
It is best to pay your tax as the UK Inland Revenue service have offices in South Africa, Australia and New Zealand to hunt down tax dodgers who have gone home. Besides, the UK Inland Revenue are very efficient and a pleasure to deal with. Also, you can save a serious amount of tax money by doing one or two simple things and by chatting to the right people.
The tax year runs from 6 April to 5 April. When you get to the United Kingdom you should register for National Insurance (NI). Alternately, your employment agent or employer should be able to assist you in registering.
The 2 most popular ways of being taxed in the United Kingdom are:
- Limited Companies
Pay As You Earn (PAYE) includes two types of tax:
- Income Tax
- National Insurance (NI)
The amount of income tax payable is calculated on your Taxable Income amount. Taxable Income is the difference between your Gross Pay (total earnings) and your Personal Allowance. This Personal Allowance is the amount that you are allowed to earn before paying tax.
The Income tax brackets for the UK 2017/2018 are as follows:
- Personal Allowance – Up to £11,500 = 0%
- Basic rate – £11,501 to £45,000 = 20%
- Higher rate – £45,001 to £150,000 = 40%
- Additional rate – £150,000+ = 45%
National Insurance (NI)
National Insurance is a tax that covers entitlements to a number of state benefits including a pension and free health care from the National Health Service (NHS). Both employers and employees are liable for NI and it is deducted at source.
The payment table (per week) is as follows:
- Up to £66 NIL
- Next £434, up to £500 10%
- Over £500 NIL – Max of £43.40
PAYE Quick Table
Click here for the overall guide to the deductions and net pay of a single person (the personal allowance is that of a single person). Please note that there may be a few exceptions, but the table will be accurate in standard cases and is a general guide.
Something like 97% of temporary workers in the UK are due a tax refund at the end of the tax year. This refund is best left to a reputable tax company who will take a percentage of your refund. No refund, no fee. To top it all, they can send the cash to wherever you are residing in the world.
Opening your English Bank Account
Despite London’s prominent position in the international banking arena, opening a bank account can be extremely difficult. Most banks require the following:
- A reference letter from your bank in your home country
- A proof of your UK address (rent receipt or gas bill in your name)
The latter is particularly difficult if you have just arrived in London and are staying with friends. One way around this is to set-up a limited company (similar to a South African Close Corporation) that you will work through when in the UK. First Contact Financial has a very good relationship with a number of high street banks and can just about guarantee a bank account for your company when you open a limited company through them (subject to you not being a total reprobate). Problem solved. Refer to the tax section to find out more about the advantages of owning your own limited company. It could mean a whole lot more pounds to blow on your travels.
The services which British banks offer may be different from your home bank e.g. a number of banks do not have on-line facilities between branches which means that when drawing cash over the counter at a branch other than your own, your branch may have to be contacted to authorise the withdrawal. Also make sure you find out what cash point withdrawal charges are and what it costs to use a competitor bank’s cash point machine.