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Wage taxes

Wage taxes are taxes that we pay from our income, although it’s not a formal term in the tax world.

In the UK, the wage taxes that we pay are Income Tax and National Insurance.

Income Tax is based on what we earn yearly. You have to pay it whether you’re employed or self-employed. The rate that you pay is based on the below table:

Income Tax rate
Up to £12,500 0% Personal allowance
£12,501 to £50,000 20% Basic rate
£50,000 to £150,000 40% Higher rate
over £150,000 45% Additional rate

Take a look at the HMRC website if you want to learn more about income tax rates.

What kind of wage taxes are National Insurance payments?

There are six types of National Insurance payment:

Classes 1, 1A, 1B, 2,3 and 4 National Insurance. By paying them, we get access to state-provided benefits like the Job Seeker’s Allowance, the Marriage Allowance, the state pension and more.  

If you’re self-employed, you have to pay Class 2 and Class 4 National Insurance. For those who are employed, you pay Class 1 National Insurance through PAYE (i.e. if you are salaried).

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