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

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

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 2021/22?

The tax-free personal allowance for the year was £12,570 and the rate of tax on incomes above this (and up to £50,270) was 20%. Above this level the higher rate of tax of 40% started to apply.

NICs were payable at 12% on earnings over £9,568 and at 2% on earnings above £50,270.

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
To use this interactive functionality a free OU account is required. Sign in or register.
Leaves taxable pay of
To use this interactive functionality a free OU account is required. Sign in or register.
Basic rate %
To use this interactive functionality a free OU account is required. Sign in or register.
on
To use this interactive functionality a free OU account is required. Sign in or register.
To use this interactive functionality a free OU account is required. Sign in or register.
Higher rate %
To use this interactive functionality a free OU account is required. Sign in or register.
on
To use this interactive functionality a free OU account is required. Sign in or register.
To use this interactive functionality a free OU account is required. Sign in or register.
Tax to be paid in the year 2019/20
To use this interactive functionality a free OU account is required. Sign in or register.
Income from employment £56,000
Threshold for paying National Insurance contributions (NICs)
To use this interactive functionality a free OU account is required. Sign in or register.
NICs %
To use this interactive functionality a free OU account is required. Sign in or register.
on
To use this interactive functionality a free OU account is required. Sign in or register.
To use this interactive functionality a free OU account is required. Sign in or register.
NICs %
To use this interactive functionality a free OU account is required. Sign in or register.
on
To use this interactive functionality a free OU account is required. Sign in or register.
To use this interactive functionality a free OU account is required. Sign in or register.
NICs to be paid in the year 2019/20
To use this interactive functionality a free OU account is required. Sign in or register.
Words: 0
Interactive feature not available in single page view (see it in standard view).

Answer

Income from employment or pension £56,000
Minus personal allowance £12,570
Leaves taxable pay of £43,430
Basic rate 20% on £37,700 £7,540
Higher rate 40% on £5,730 £2,292
Tax to be paid in the year 2021/22 £9,832
Income from employment £56,000
Threshold for paying National Insurance contributions (NICs) £9,568
NICs 12% on £40,702 £4,884.24
NICs 2% on £5,730 £114.60
NICs to be paid in the year 2021/22 £4,998.84

Note that NICs are not paid on pensions.

AOM_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371