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Self-employment allowances 2018-19 Personal allowance

Updated: Apr 25, 2019

Self-employed? 12 tax changes you need to know for 2018-19

Personal allowance and higher rate increases. For 2018-19, the personal allowance has increased from £11,500 to £11,850.The starter rate of 19 per cent is applicable to income between £11,850 and £13,850. As you're self-employed, you pay tax on your profits, which is what you've earned after your expenses are deducted.

Tax facts - 2018/19

INCOME TAX ALLOWANCES

2018/19 2017/18

Basic personal allowance £11,850 £11,500

Married/civil partners allowance £8,695 £8,445

Minimum married/civil partners allowance £3,360 £3,260


You can earn a certain amount of income each year, called your Personal Allowance, before you need to pay any Income Tax. In general, everyone gets the same Personal Allowance of £11,850 for the year 2018-19. However, you might get less if your income is over £100,000 or if you owe tax from a previous tax year.

Tax and National Insurance. You have to pay: Income Tax if you earn more than £958 a month on average - this is your Personal Allowance. National Insurance if you earn more than £157 a week.

National Insurance has to be paid by both employed and self-employed workers. 

Your National Insurance contributions depend on your employment status and how much you earn. Not everybody has to pay National Insurance, but contributions count towards your state pension and other benefits.

If you have an employer, you'll pay Class 1 National Insurance contributions. This also includes if you're self-employed but work for an employer - it's your employer's job to pay your National Insurance through your payslips, as well as their own employer contributions of 13.8%.

It's worth finding out if you're exempt from paying National Insurance. If you don't have to pay National Insurance you might be eligible for National Insurance credits, or you can choose to make voluntary contributions. 

National Insurance rates 2018-19

The amount of National Insurance you pay is worked out in a similar way to income tax. 

National Insurance is calculated on gross earnings (before tax or pension deductions) above an 'earnings threshold'.

Your employer will deduct Class 1 National Insurance contributions from your:

  • salary

  • commission or bonuses

  • overtime

  • sick pay

  • maternity, paternity and adoption pay.

For 2018-19, the National Insurance threshold is £8,424 a year (up from £8,164 in 2017-18). If your earnings are below the earnings threshold, you pay no National Insurance contributions.

If you earn above the threshold, you pay 12% of your earnings between £8,424 and £46,350 (increased from £45,000 in 2017-18).

On anything you earn above £46,350 a year, you pay National Insurance at 2%



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