Need help understanding National Insurance and Tax "credits"

Somebody sent me the link to the Inland Revenue site but I do not understand the table I am looking at. When i lived in the UK 20 years ago it was a flat 5 1/4% i believe. Now it looks like it might go as high as 11% - tell me this isnt so! Do you figure it based on your tax band or what? Any help would be appreciated.

Also if someone can tell me what allowances a married couple with a 16-year old will get before taxes are taken and if this is accounted for in your paycheck or at the end of the year when you file that would be great.

Thanks

G

Somebody sent me the link to the Inland Revenue site but I do not understand the table I am looking at. When i lived in the UK 20 years ago it was a flat 5 1/4% i believe. Now it looks like it might go as high as 11% - tell me this isnt so! Do you figure it based on your tax band or what? Any help would be appreciated.

Also if someone can tell me what allowances a married couple with a 16-year old will get before taxes are taken and if this is accounted for in your paycheck or at the end of the year when you file that would be great.

Thanks

G

As far as I know they stopped allowances, theres is no married couple allowance. As for children,you'd have to apply for child tax credit. You can also apply for working credit.
This is credited to you in your account either weekly or monthly.
Example: If you're entitled to £500 for the credits throughout the year,you'd get about £41.66 a month or £10.41 a week


It isn't accounted in your paychecks

You'd have to double check though as to whether you qualify for child tax credit or working tax credit.  My recollection is that these require indefinite leave to remain for the person claiming the credit ( just as for child benefit).

yes i forgot that point thanks guya

If you're not an EU citizen and subject to immigration control then you can't apply,if your spouse is a citizen then they can apply

I was given this useful link so thought i would pass it along.

You can calculate your tax code and then figure out your income and NI Tax:

http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/BeginnersGuideToTaxArticles/fs/en?CONTENT_ID=4015904&chk=izW7Qe [nofollow]
 
Thanks for the feedback

G

They've stopped the allowance, and a lot of deductions that they used to have (remember when we could deduct mortgage interest?). There are very few now, except for the child credit the others mentioned. I think the only one we get in addition is an allowance for professional memberships, which really doesn't make a difference.

UK Income tax:
10% for 0-2090
22%: 2091-32400
40% over 32400

NI: depends on employer, but generally 9% for the employee and the balance paid by employer.

The overall rate for us is not that different to the US, but the difference is that in the US you can deduct mortage interest, property tax, state income tax, etc, etc, etc, which (for some) brings the overall level down significantly.

But you can now deduct up to £215,000 a year for pension contributions (or your earnings if lower, which mine certainly are!), and get back 25% of the fund free of UK and US taxes.

Ack! Guya!  You were too brief just there. 

The whole story:

The treaty limits the amount of pension contributions (into a UK plan by a US citizen) to "the equivalent plan" in the US.  US plans maximum contributions are much smaller, about $18000 (401ks) to $46000 (defined benefit plans) (and no, I'm not looking at my charts so I'm probably off by a few thou).

If you don't invoke the treaty, then you are limited by your excess unused foreign tax credits.  If you're a seven figure earner, you might just squeak by with the maximum £215,000 contribution; but most times the amounts tend to be in the range of $50,000 (unless it's high seven figures).

The 25% tax-free withdrawal is tax-free in UK.  The 25% is not free in the US.  It is either entirely taxable (if you invoked the treaty) or part taxable (if you didn't invoke the treaty).  You will need a buildup of excess foreign tax credits to offset the tax on the 25%. 

If y'all want to put in a buttload into a plan, get professional advice to determine the maximum you can contribute without increasing your US tax.