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Employing someone and the taxes involved

Thursday 16th July 2015

Taking on an employee might seem very daunting but there are some great tax reliefs which make it cheaper than you may have thought.

Let’s say you wanted to take on a junior and give them a salary of £19,200 a year which is £1,600 a month. This would work out on average as follows:

£1,345.42 would be paid to your employee

£143.18 would be paid in PAYE to HMRC

£111.40 would be paid in Employee’s National Insurance Contributions (NIC) to HMRC

£0.00 in Employer’s NIC due to the Employer’s NIC Allowance which means the first £2,500 of Employer’s NIC is not payable. Before the Employer’s NIC Allowance you would of had to pay £1,530.14 on a £19,200 annual salary

Total amount paid out each month = £1,600

However this would reduce your Corporation tax bill by £320 each month so the actual overall cost to your company is only £1,280

As a member of The 123 Way you can add members of staff to your payroll and we do not charge you any additional fees.

For more information on payrolls and taking on an employee do get in touch today by emailing Christopher on chris@123contracting.co.uk

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