Managing My Money

Week 2 - Income, Taxation and Benefits - Part 2, Episode 4

Share Radio & Open University Business School

''By working faithfully eight hours a day, you may eventually get to be a boss and work twelve hours a day'.

Robert Frost

Welcome

to Managing My Money presented by Glen Goodman and Annie Weston

Tax

PAYE -

'Pay As You Earn': taxation for employed people

Gross pay

Tax deducted

National Insurance deducted

Net pay

Self-employed people must put aside tax to pay later

  • Calculated over the financial year, 6th April to next 5th April
  • Pay tax in 2 instalments
  • Don't spend it before you have to pay it!

Income Tax & NI

  • Personal Allowance first
  • Then progressive: tax rates rise as income rises (PAYE)
  • To reduce income inequality
  • NI was originally state insurance for health etc..
  • Employers pay NI too, at 13.8% of salary
  • NI raises 1/5 of all Government income

Other Taxes

  • VAT - Value Added Tax: included in prices in UK
  • Stamp Duty - on houses, shares
  • Plus many , many more ..

Income Tax

  • First £12,571 (personal allowance) at 0%*
  • Next £37,700 or part thereof at 20%
  • Next part up to £125,140 at 40%
  • Over £125,140 taxed at 45%
  • So annual income of £25,000 would mean tax of £2,486
  • Annual income of £80,000 would mean tax of £19,342
  • described as 'Progressive taxation'
  • * no personal allowance if earning over £125,140

National Insurance

  • First £242 per week - no charge
  • Next £725 per week - you pay 8%
  • Over £967 per week - you pay 2%
  • Also your employer pays 13.8%
  • So £25,000 pa would mean you pay £993 NI
  • At £80,000 pa you would pay £3,610 NI

2024/25 rates of -

Benefits

.. and the Poverty Trap

Welcome to -

Ed Bowsher, Share Radio's  former personal finance expert.

He covers big financial issues in a simple, easy-to-understand way at Share Radio, and here he explains how good ideas added together can get very complicated.

Bungling Bill and the Benefits system

Next:

Take the Week 2 quiz/test at www.shareradio.co.uk - as you take each week of the course, your results will build up on your personal dashboard.

Managing My Money:

is broadcast by Share Radio and is based on the Open University Business School online course of the same name.

Your presenters are Glen Goodman and Annie Weston.