2018/19 Income Tax & National Insurance rates

This guide contains the Income Tax and National Insurance rates and Personal Allowance for the tax year 6 April 2018 to 5 April 2019.

Personal Allowance

For the majority of employees, the tax-free Personal Allowance for 2018/19 will be £11,850 which means the first £11,850 of earnings in the tax year will be free of Income Tax.

This will be reflected in your tax code. If your tax code for 2018/19 is 1185L then you will be entitled to this allowance when your salary is calculated. Your coding notice may be adjusted by any allowances you are entitled to which reduce your tax bill or things that you have to pay tax on through your salary or pension. You can find more information on tax codes here.

Income Tax rates

Income per year Rate (salaries) Rate (dividends) – above dividend allowance of £2,000
Basic Rate £11,850 – £46,350 20% 7.5%
Higher Rate £46,351 – £150,000 40% 32.5%
Additional Rate Above £150,000 45% 38.1%

Income Tax example

If an employee earns a salary of £56,000 they will pay tax as follows:

  • Personal Allowance – the first £11,850 of their salary will be free of tax
  • Basic Rate – they will pay 20% tax on £34,500 of their salary, which is £6,900
  • Higher Rate – they will pay 40% tax on the remaining £9,650 of their salary, which is £3,860
  • In total, this employee will pay £10,760 in Income Tax
Additional note, Scottish Tax Codes
Please be aware that Income Tax rates are different for Scottish taxpayers. HMRC will determine whether or not you are a Scottish taxpayer based on where your main place of residence is. If you are a Scottish taxpayer, your 2018/19 PAYE tax code will have the letter ‘S’ at the front.

You can find more information on the Scottish PAYE tax codes and rates here.

National Insurance rates

There are two different National Insurance contributions that must be paid: one is paid by the employee and is deducted from their gross salary, in a similar way to income tax; the second payment is made by the employer and is an additional outgoing for the employer, in addition to gross salaries.

Paid by Employees Paid by Employers
Income per year Rate Income per year Rate
Below £8,424 0% Below £8,424 0%
£8,425 – £46,350 12% Above £8,424 13.8%
Above £46,350 2%  Above £46,350  13.8%

National Insurance and state benefits

Employees must earn over £6,032 per year in order to retain access to certain state benefits, such as state pensions.

 

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