Overseas trained teachers’ guide to UK taxation

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The UK operates a Pay as You Earn (PAYE) system for candidates employed by a recruitment agency or umbrella company.  Your UK employer will make the relevant tax deductions from each salary payment they make to you and pay it directly to Her Majesty Revenue and Customs (HMRC)

The HMRC is the equivalent of the ATO in Australia, the IRD in New Zealand, and the CRA in Canada.

The UK Tax Year runs each year from the 6th April to the 5th April of the following year.

It is not compulsory for you to complete a UK Tax Return.

This guide will give you a basic overview of the typical deductions that are deducted via the UK PAYE system.

Income Tax

Income Tax is deducted from the gross salary paid to you.

2014-15 Income Tax deductions


Income Tax band Income Tax rate applicable
£0 – £31,865 20%
£31,866 – £150,000 40%


Personal Tax Allowance

Not all of your salary is subject to income tax as nearly every UK resident employee will receive a personal tax free allowance.

The standard Personal Tax allowance for 2014/2015 is £10,000.  The tax code you are given by HMRC will dictate your personal tax allowance (see section below on how to obtain a personal tax allowance)

Your personal tax allowance is divided weekly over the tax year so each salary payment will have a proportion of income not subject to tax.

For the tax year 2014/2015 the standard weekly income tax free allowance will be £192 per week.  If this is your first job in the UK, this tax free allowance is back dated to 6 April 2014, so you may find you pay little or no income tax on your first few salary payments.

If you’re planning to undertake supply teaching work via more than one agency, then it’s advisable that you try to use one umbrella company to employ you on all your assignments. This will ensure the most tax efficient use of your personal allowance.

How to obtain a Personal Tax allowance

If this is your first job in the UK, it is essential to complete a starter declaration form (P46) which your recruitment agency or umbrella company will provide you with.  Completing the P46 form will provide you with a temporary tax code and therefore the appropriate personal tax free allowance.  You may be able to complete the starter declaration form (P46) electronically as part of your employment registration with the recruitment agency or umbrella company.

Employee National Insurance

You pay National Insurance contributions to build up your entitlement to certain state benefits.

As an employee you pay Class 1 National Insurance contributions. The rates are:

  • if you earn more than £153 a week and up to £805 a week, you pay 12% of the amount you earn between £153 and £805
  • if you earn more than £805 a week, you also pay 2 per cent of all your earnings over £805

These Employee National Insurance contributions are automatically deducted via the PAYE system so you don’t have to worry about completing a tax return.

How to obtain a National Insurance number

You will need to phone Job Centre Plus on 0845 6000 643.  They will send you an application form for you to complete and return to them.  The standard turnaround for you to receive a National Insurance number is 7 – 10 working days.

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