147-149 Alfreton Road, Nottingham, NG7 3JL

0333 344 6279

Tax Information

Tax

Paying Tax When Self-Employed

How much tax you’ll pay as a self-employed person will depend on how much money you’ve made and the ‘allowable expenses’ you’ve incurred in the course of your business. Certain business-related expenses can be subtracted from your income when you’re calculating your taxable profit.

The tax-free personal allowance and the tax bands are the same for self-employed and employed people, so for 2019-20 you can make up to £12,500 before you need to pay tax (£11,850 for 2018-19). You’ll then pay the basic rate of income tax (20%) on income up to £50,000 (£46,350 for 2018-19). The higher rate of 40% applies to income over £50,000, and on income over £150,000 you pay the additional rate of 45%.

Find a list of HMRC calculators and tools to help you work out your tax.

Tax and National Insurance When You're Self-Employed

Working out your employment status

To work out how much tax and National Insurance you should pay, first you need to work out whether you’re employed or self-employed.

This is usually straightforward, but sometimes it’s a bit more complex – for example you could be employed in one job and at the same time self-employed in a different job.

The HM Revenue & Customs (HMRC) website has a tool called the Employment Status Indicator that will work out your employment status for you based on your answers to a series of questions.

This is only an indicator and will not give you a definitive answer on your employment status.

Use the Employment Status Indicator

Find out more about your employment status and rights here.

Tax threshold, rates and codes

The amount of Income Tax you deduct from your employees depends on their tax code. It also depends on how much of their taxable income is above their Personal Allowance.

There are different rates for Scotland.

PAYE Tax Rates and Thresholds UK 2018 - 2019

Employment Personal Allowance

  • £228 per month
  • £988 per week
  • £11,850 per year

UK Basic Tax Rate

- 20% on annual earnings above the PAYE tax threshold and up to £34,500

UK Higher Tax Rate

- 40% on annual earnings from £34,501 to £150,000

UK Additional Tax Rate

- 45% on annual earnings above £150,000

PAYE Tax Rates and Thresholds Scotland 2018 - 2019

Employment Personal Allowance

  • £228 per month
  • £988 per week
  • £11,850 per year

Scottish Starter Tax Rate

- 19% on annual earnings above the PAYE tax threshold and up to £2,000

Scotland Basic Tax Rate

- 20% on annual earnings from £2,001 to £12,150

Scotland Intermediate Tax Rate

- 21% on annual earnings from £12,151 to £31,580

Scotland Higher Tax Rate

- 41% on annual earnings from £31,581 to £150,000

Scotland Top Tax Rate

- 46% on annual earnings above £150,000

Emergency Tax Codes

The Emergency Tax Codes From 6 April 2018 Are:

  • 1185L W1
  • 1185L M1
  • 1185L X

Find out more about emegency tax codes

Class 1 National Insurance Thresholds

- You can only make National Insurance deductions on earnings above the Lower Earnings Limit (LEL).

Class 1 National Insurance Thresholds 2018 to 2019

  • LEL £116 per week
  • £503 per month
  • £6,032 per year

Primary Threshold (PT) £162 per week

  • £702 per month
  • £8,424 per year

Secondary Threshold (ST) £162 per week

  • £702 per month
  • £8,424 per year

Upper Secondary Threshold (under 21) (UST) £892 per week

  • £3863 per month
  • £46,350 per year

Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) £892 per week

  • £3863 per month
  • £46,350 per year

Upper Earnings Limit (UEL) £892 per week

  • £3863 per month
  • £46,350 per year

Class 1 National Insurance rates

- Employee (primary) contribution rates

- Deduct primary contributions (employee’s National Insurance) from your employees’ pay through PAYE.

For more information about our services and the potential benefits including increased take home pay, contact RM Business Associates Ltd: 0333 344 6279 /

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