MSE’s Academy of Money
MSE’s Academy of Money

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MSE’s Academy of Money

4 Half-time quiz

How much in income tax and National Insurance Contributions (NICs) would be paid by someone earning £56,000 in 2019/20?

The tax-free personal allowance for the year was £12,500 and the rate of tax on incomes above this (and up to £50,000) was 20%. Above this level the higher rate of tax of 40% started to apply.

NICs were payable at 12% on earnings over £8,632 and at 2% on earnings above £50,000.

Information about income tax is provided in Section 2 and details about NICs are given in Section 3.

If you find it helpful, work out your answer using the following process.

Half-time quiz

Income from employment or pension £56,000
Minus personal allowance
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Leaves taxable pay of
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Basic rate %
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on
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Higher rate %
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on
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Tax to be paid in the year 2019/20
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Income from employment £56,000
Threshold for paying National Insurance contributions (NICs)
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NICs %
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on
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NICs %
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on
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NICs to be paid in the year 2019/20
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Words: 0
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Answer

Income from employment or pension £56,000
Minus personal allowance £12,500
Leaves taxable pay of £43,500
Basic rate 20% on £37,500 £7,500
Higher rate 40% on £6,000 £2,400
Tax to be paid in the year 2019/20 £9,900
Income from employment £56,000
Threshold for paying National Insurance contributions (NICs) £8,632
NICs 12% on £41,368 £4,964.16
NICs 2% on £6,000 £120
NICs to be paid in the year 2019/20 £5,084.16

Note that NICs are not paid on pensions.

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