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

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.