There are two taxes that agency workers have to pay (PAYE and National Insurance), the amount varies each week depending on your total earnings and individual tax code.
PAYE Tax Free Personal Allowance
- Nearly everyone who lives in the UK gets a tax-free Personal Allowance - this is the amount of income you can receive without having to pay tax on it.
- The standard Tax code for 2020 - 2021 is 1250L , and your tax-free Personal Allowance is broken down into weeks and spread equally over the tax year, for example:
- 1250L =£12,500 / 52 working weeks in a year = £240 tax-free Personal allowance before deductions
- You can check your Tax code on your payslip. If your tax code is BR or 0T it may be because you may have not completed a New Starter Checklist, handed in a P45 or the HMRC have notified us.
| PAYE tax rates and thresholds | 2020 to 2021 |
|---|---|
| Employee personal allowance | £240 per week £1,042 per month £12,500 per year |
| UK basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,500 |
| UK higher tax rate | 40% on annual earnings from £37,501 to £150,000 |
| UK additional tax rate | 45% on annual earnings above £150,000 |
Scotland
| PAYE tax rates and thresholds | 2020 to 2021 |
|---|---|
| Employee personal allowance | £240 per week £1,042 per month £12,500 per year |
| Scottish starter tax rate | 19% on annual earnings above the PAYE tax threshold and up to £2,085 |
| Scottish basic tax rate | 20% on annual earnings from £2,086 to £12,658 |
| Scottish intermediate tax rate | 21% on annual earnings from £12,659 to £30,930 |
| Scottish higher tax rate | 41% on annual earnings from £30,931 to £150,000 |
| Scottish top tax rate | 46% on annual earnings above £150,000 |
If you are interested in calculating your tax you can use this calculator tool - http://www.listentotaxman.com/
If you think you are being taxed too much?
The first thing to check is your Tax code on your most recent payslip. If your Tax code is BR (Basic Rate) or 0T it means you are being emergency taxed; this may be because:
- You have not submitted your P45 or New Starter form to payroll
- You have declared you are working in another job where your earnings are higher
- The HMRC have notified us to change your tax code to a lower tax threshold allowance
- Another common explanation may be because you have submitted 2 or more timesheets in one week taking you above the weekly tax-free allowance - click here for more information.
How much National Insurance will I pay?
- The rates shown below are for the 2020-21 tax year and show how much you can earn weekly before National Insurance is deducted.
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 | 2020 to 2021 |
|---|---|
| LEL | £120 per week £520 per month £6,240 per year |
| Primary Threshold (PT) | £183 per week £792 per month £9,500 per year |
| Secondary Threshold (ST) | £169 per week £732 per month £8,788 per year |
| Upper Secondary Threshold (under 21) (UST) | £962 per week £4,167 per month £50,000 per year |
| Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) | £962 per week £4,167 per month £50,000 per year |
| Upper Earnings Limit (UEL) | £962 per week £4,167 per month £50,000 per year |
- See the HMRC site for further information on National Insurance: http://www.hmrc.gov.uk/rates/nic.htm
- Or try the HMRC National Insurance calculator to give you a detailed calculation.