Taxes in the United Kingdom

Employers pay National Insurance Contributions (NICs) at 15% on earnings above £5,000/year (£417/month) through the PAYE system. NICs fund the NHS, State Pension, sick pay, maternity/paternity pay, and other benefits. Eligible employers can claim up to £10,500 Employment Allowance.

The tax deduction is calculated and taken by HMRC through the PAYE system. For benefits in kind, such as company car, private health insurance, childcare or travel and entertainment expenses, the employer must inform HMRC and pay tax and National Insurance.

Employers must offer a workplace pension within 3 months via automatic enrolment (unless employee has qualifying scheme). Minimum employer contribution: 3% + employee 5% on qualifying earnings (£6,240–£50,270). Employers must provide written enrolment details and re-enrol every 3 years.

Employees pay NICs building entitlement to State Pension and benefits. Rate: 8% (£12,570–£50,270/year); 2% above. Deducted via PAYE

Collected via PAYE. First £12,570 tax-free (personal allowance), tapered £1 for every £2 over £100,000 (zero above £125,140). Employer deducts tax + reports benefits in kind to HMRC.

Employee minimum contribution 5% on qualifying earnings (£6,240–£50,270) if they opt in. Total minimum with employer 3% = 8%.

Figures for 2025/26 tax year (Apr 6, 2025–Apr 5, 2026). Always verify with GOV.UK.