Taxes in the UK

The UK tax system funds essential public services, including healthcare, education, infrastructure, and social welfare programs.

Income Tax

Income tax is levied on various sources of income, including:

• Wages from employment
• Profits from self-employment
• Taxable benefits
• Pensions
• Income from property, savings, and dividends

Most employees pay income tax through the Pay As You Earn (PAYE) system, where tax is deducted directly from their wages by their employer. Self-employed individuals and those with more complex tax situations may need to file a Self Assessment tax return. HM Revenue & Customs (HMRC) is the government department responsible for tax collection.

National Insurance

National Insurance Contributions (NICs) fund social security benefits, such as the state pension and the National Health Service (NHS). Both employees and self-employed individuals pay NICs. Insufficient NIC payments can affect eligibility for certain benefits.

National Insurance Number

A National Insurance number is a unique identifier used to track an individual’s NICs and tax payments. UK residents typically receive their National Insurance number before their 16th birthday. Non-UK nationals working or seeking work in the UK must apply for a National Insurance number through the Department for Work and Pensions (DWP).