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Sort Out Your Family Finances: Tax, NI and benefits

by Bob Reeves

Income tax for most people is 20% of income. This is deducted from your pay at source from your wages and the amount will be detailed on your payslip. If you are on a low income of less than around £6500 you do not pay any tax and if you are on a high income (anything over about £38,000) the tax goes up to 40%. On top of this you will also pay national insurance contributions , which are mainly used to pay for your state pension. This means that anywhere between 30-50% of your salary may disappear in tax and national insurance before you even get your hands on it.

We also pay other forms of tax such as VAT which is a tax added to the cost of most items that we buy, Capital Gains Tax on the sale of second homes and other capital items and Inheritance Tax on the estate of our deceased relatives.

Many of our taxes go into paying for the benefits system that provides financial support for specific groups of people such as the unemployed, the elderly and people who are ill.

It is in your interest to check that you are paying the right amount of tax and that you are claiming any benefits to which you might be entitled. Some benefits are means tested which means that they are based on income, but some are related to other factors such as whether you have children, or how old you are.


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Sort Out Your Family Finances: Teach Yourself

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