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tax numbers for free, how?

Don't pay an agency to sort out tax and bank accounts! Do it yourself it's easy once you know!

Explaining Tax Numbers

In the UK your tax numbers are called a National Insurance number. You don't need one to start working but you do need one in order to be taxed correctly.

Skip the long story, how do I get one?
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Most likely having a National Insurance number will mean you pay less tax.

The amount you save can be big or small depending on how many hours you work. Seeing as it can be time consuming to get your tax numbers you may choose to wait until you are working longer hours for it to be worth your while.

When you start employment you will automatically generate a temporary NI number when you are entered into the computer system at your place of employment. This number is most likely to be a couple of letters followed by your birth date followed by M or F as determined by your gender – pretty simple stuff.

To get your legitimate NI number requires a bit more effort. First of all you have to make an appointment with Inland Revenue. Now if you happen to be living in London, don't expect to be granted an interview within 6 weeks – as was the case with me. Elsewhere the waiting times are usually shorter.

You can work on a temporary NI number indefinitely but this will mean you will end up paying too much tax.

For example, in the first pub I worked at in London , I was working 40hours a week with 2 days off (bliss), however I was earning only ₤160 a week (no tips). The side effect of this was that as my income was so low my tax was low also. The tax free threshold in the UK was around 5225pa so I was really only paying tax on about ₤50 a week which worked out to be bugger all for me to worry about.

-note- The personal tax allowance for the 2009/2010 tax year is 6475. This roughly means that the first 125 you earn each week will not be taxed which is great for low income earners like you.

However some time later I found myself at a different pub working 80+ hours per week. After a few months I was interested in why it didn't seem I was receiving the right size pay cheque for the hours I was working. By talking to my fellow workmates I discovered that I had been automatically bumped up into a 28% tax bracket. It was then I made arrangements to get my real tax numbers sorted out.

Tax bands - 2009/2010

There are now just 3 tax bands / brackets in the UK. The first 6,475 is tax free, after that and up to 37,400 you will fork out 20% to Inland Revenue and anything you earn over 37,401 you will pay 40% tax! 

Tax numbers - HM Revenue & Customs official tax bands explained

winding road uk

"In this world nothing can be said to be certain, except death and taxes.”

Benjamin Franklin

 

 

 

The bonus of paying too much tax for a couple of months is that when I finally did get my NI number I received all my extra tax back in one hit. In fact many working holiday makers intentionally stay on their temporary tax numbers for the entire length of their stay so that when it's time to leave the UK – be it to go back home or on to other countries – they can apply to get all their tax back and leave with a bit of a bonus in their back pocket.

This sounds like a cool idea but there is no guarantee you will get all of it back, and keep in mind how hard it may be to collect from Her Majesty's Inland Revenue Service when you are in a different county, so it's not a method I would recommend.

 

Finally! How to arrange your National Insurance Number

All you need is

  • the phone number for Inland Revenue
  • an available phone (I recommend the pub phone or other land-line)
  • 10 mins of your time to set up your 'Evidence of Identity interview'

Interviews will be held at the local DWP Job centre Plus. Shouldn't be more than half and hour away (unless you're working in the Scottish Highlands – in which case take a cut lunch and a beer). Inland Revenue will ask you some questions and advise you of all information you will need to provide on the day.

- Inland Revenue is contactable on -


0845 600 0643
or
0845 915 7006

Oh and if you prefer to wade through pages of bureaucracy and check out all the information on tax numbers for yourself visit http://www.hmrc.gov.uk

Another thing about National Insurance

Aside from your PAYE tax you may notice on your pay cheque that you are also paying money to something called 'Employer NIC' or 'Nat Ins'

This is the National Insurance Contribution fund. It's the UK pension fund or super-annuation fund. It's money that gets put away for your retirement. Great idea if you intend on retiring in the UK and a complete loss of income if you don't. Ask your manager or contact Inland Revenue to find out how to 'opt out' of this scheme (and into a personal pension scheme) Do this before the end of the fiscal year in April or you'll lose all contributions paid.

So that should be your tax numbers sorted out, now click the 'next' button below to find out how to set up a bank account without it costing you money.

-note- The information on this site is the interpretation of my own research. Always check official websites for yourself!

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