Tax Rates for 2011/12

Do you know what rate of tax you are paying?

The Chancellor changes the tax rates every year and the current tax year 2011/12 was no exception.  Our guide looks at what income tax and National Insurance contribution rates you will pay this tax year.

Income Tax

In the 2011/12 tax year, everyone receives their ‘personal allowance’ of £7,475.  This means that you can earn up to this amount without paying any income tax.  People over the age of 65, blind people and married couples born before April 6, 1935 also receive an additional ‘tax free’ allowance.

You then pay tax on any earnings you earn above and beyond your total personal allowance.

The tax rates for 2011/12 are:

  • Basic rate (20 per cent) on the first £35,000 of your taxable income
  • Higher rate (40 per cent) on your taxable income between £35,001 and £150,000
  • Additional rate (50 per cent) on your taxable income above £150,000

For example, if you earned £25,000 a year and had the basic personal allowance, you would pay tax as follows:

  • £0 – £7,475 – No tax (this is your personal allowance)
  • £7,475 – £25,000 (equivalent to taxable income of £17,525) – 20 per cent – £3,505

If you earned £50,000 a year and had the basic personal allowance, you would pay tax as follows:

  • £0 – £7,475 – No tax (this is your personal allowance)
  • £7,475 – £42,475 (equivalent to taxable income of £35,000) – 20 per cent – £7,000
  • £42,476 – £50,000 (equivalent to taxable income of £7,524) – 40 per cent – £3,010

In this example you’d pay total income tax of £10,010.

National Insurance Contributions

The amount of National Insurance Contributions that you pay depends on whether you are employed or self employed.

If you’re employed, you’ll pay the following National Insurance contribution rates in tax year 2011/12:

  • Earnings of £0 – £139 per week – Nil
  • Earnings of £139 to £817 per week – 12 per cent
  • Earnings above £817 per week – 2 per cent

If you’re self employed, you’ll pay the following Class 4 National Insurance contribution rates in tax year 2011/12:

  • Annual profits under £7,225 – Nil
  • Annual profits of £7,225 to £42,475 – 9 per cent
  • Annual profits above £42,475 – 2 per cent

In addition, if your profits are over £5,315 you will pay Class 2 National Insurance contributions of £2.50 per week.

2 comments

  1. festus says:

    i woul like you to improve more on this site

  2. festus says:

    i earned £17.088as grosspay in year 2010/2011 and i paid £2.200.00 tax. married with a child. how much tax refund am i expecting? Regards.

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