Tax Changes for 2012/2013
Key Tax Changes for Umbrella Company contractors from 6th April 2012 and for Personal Service Companies from 1st April 2012:
Employee National Insurance threshold (ie free from National insurance) increases from £139 per week to £146 per week (or to £634 per month).
Employer National Insurance threshold increases from £136 per week to £144 per week (or £624 per month).
Personal Allowance increases from £7,475 per annum to £8,105 per annum.
To reflect the increase in the personal allowance the higher rate tax threshold for taxable earnings drops from £35,000 to £34,370. In simple terms this means you can earn £42,475 before paying 40% tax (being your personal allowance plus the lower rate limit) and this is therefore unchanged from the previous tax year.
Basic tax rate remains at 20% and Higher rate tax rate 40%. An additional rate of 50% exists for taxable earnings over £150,000. The personal allowance also reduces by £1 for every £2 of income over £100,000.
The Writing Down Allowance in respect of Capital Allowances for Plant and Machinery drops from 20% to 18%.
If you are contractor working in the UK interested in hearing more about your pay and taxation options please call PayMatters on 0800 121 6513.