Glasgow

1. Overview of Taxes and National Insurance in the UK

In the UK, including Glasgow, taxes and National Insurance contributions (NICs) are deducted from your income if you are employed or self-employed. These deductions fund public services such as healthcare (NHS), education, and social security benefits.

The two main deductions from your income are:

• Income Tax
• National Insurance Contributions (NICs)

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2. Income Tax in Glasgow

Income Tax is a tax on your earnings, and it is calculated based on your income level. The UK has a progressive tax system, meaning the more you earn, the higher the percentage of tax you pay.

Income Tax Bands (2023/24 Tax Year)

The tax bands and rates for Scotland (which differ slightly from the rest of the UK) are as follows:

• Personal Allowance: £12,570 (no tax on income up to this amount)
• Starter Rate: 19% on income between £12,571 and £14,732
• Basic Rate: 20% on income between £14,733 and £25,688
• Intermediate Rate: 21% on income between £25,689 and £43,662
• Higher Rate: 42% on income between £43,663 and £125,140
• Top Rate: 47% on income over £125,140

Key Points to Note:

• The Personal Allowance may be reduced if your income exceeds £100,000.
• Scotland has its own tax bands, which differ from the rest of the UK. These apply to residents of Glasgow and other parts of Scotland.

How Income Tax is Paid:

• If you are employed, your employer will deduct Income Tax from your salary through the Pay As You Earn (PAYE) system.
• If you are self-employed, you will need to file a Self Assessment tax return annually and pay your tax directly to HM Revenue & Customs (HMRC).

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3. National Insurance Contributions (NICs)

National Insurance is a separate deduction from your income that funds state benefits, including the State Pension, unemployment benefits, and maternity pay.

NIC Rates for Employees (2023/24 Tax Year)

• Class 1 Contributions (for employees):
  • Earnings below £12,570/year: No NICs
  • Earnings between £12,570 and £50,270/year: 12%
  • Earnings above £50,270/year: 2%

NIC Rates for Self-Employed Individuals

• Class 2 Contributions: £3.45 per week if your profits are over £12,570/year.
• Class 4 Contributions: 9% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

How NICs are Paid:

• If you are employed, NICs are deducted automatically through PAYE.
• If you are self-employed, you will pay NICs as part of your Self Assessment tax return.

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4. How to Register for Taxes and NICs

To work in Glasgow, you must have a National Insurance Number (NINo) and ensure you are registered with HMRC.

Steps to Get a National Insurance Number (NINo):

1. Check if you already have one: If you grew up in the UK, you likely received your NINo automatically at age 16.
2. Apply for a NINo (if you don’t have one):
   • Call the National Insurance Number application line at 0800 141 2075.
   • You may need to attend an interview and provide documents such as your passport, visa, or proof of address.
3. Processing Time: It can take up to 16 weeks to receive your NINo.

Registering with HMRC:

• If you are employed, your employer will handle your tax and NIC registration.
• If you are self-employed, you must register with HMRC for Self Assessment. You can do this online at the HMRC website.

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5. Local Considerations in Glasgow

While taxes and NICs are managed at the national level, there are some local considerations for Glasgow residents:

Cost of Living in Glasgow

• Glasgow has a lower cost of living compared to other major UK cities like London or Edinburgh. This can make it easier to manage your finances after tax and NIC deductions.
• Average rent for a one-bedroom apartment in Glasgow is around £700–£900 per month.

Public Services Funded by Taxes

• Healthcare: Glasgow residents benefit from free healthcare under the NHS, funded by taxes and NICs.
• Public Transport: Glasgow has an affordable public transport system, including buses, trains, and the subway. Monthly travel passes cost around £60–£80.

Local Tax Support

• Glasgow City Council offers support for low-income residents, such as Council Tax Reduction. Council Tax is a separate local tax for services like waste collection and street maintenance.

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6. Resources for Help and Advice

If you need assistance with taxes or NICs, the following resources can help:

HM Revenue & Customs (HMRC)

• Website: www.gov.uk/hmrc
• Phone: 0300 200 3300 (Income Tax helpline)

Citizens Advice Scotland

• Provides free advice on tax, benefits, and employment.
• Website: www.citizensadvice.org.uk/scotland
• Local Glasgow office: Check their website for locations.

TaxAid

• A charity offering free tax advice for low-income individuals.
• Website: www.taxaid.org.uk

Accountants and Tax Advisors

• If your tax situation is complex, consider hiring a local accountant in Glasgow. Fees typically range from £150–£500 for basic tax return services.

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7. Tips for Managing Taxes and NICs

• Keep Records: Maintain records of your income, expenses, and tax payments for at least 5 years.
• Check Your Tax Code: Your tax code determines how much tax is deducted. If it’s incorrect, you may overpay or underpay tax.
• Use Online Tools: HMRC’s online calculator can help you estimate your tax and NICs.
• Plan for Self-Assessment Deadlines: If self-employed, file your tax return by 31 January each year to avoid penalties.

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By understanding the tax and National Insurance system in Glasgow, you can ensure compliance and manage your finances effectively. If you have further questions, feel free to ask!