tax code

katarinaO

Hi thereI would like to know if is my tax code correct. Im earnig £17,460 per year and my tax code is 647L. All my colleagues has same code and they earing much more, some of them over £40,000. I heard we shoulb be tax around 20%. I dont realy understand this, can you help please?ThanksKO

newlywed

Your tax code stipulates how much money you can earn before paying tax - eg 647= approx £6,470 a year before paying any tax.

After that you pay approx 20% tax until you reach wages of approx £36,000 a year - then you have to pay 40% tax on everything you earn over and above the £36k.

So you would have the same tax codes - but how much tax they pay is dependent on how much money they earn OVER the 647 tax free allowance each year

So earning £6470 a year = no tax
earnings between 6470 and 36k = 20% rate (ish ?)
earnings above 36k = 40% tax.

So people earning 40K will have the tax free bit, then the 20% tax and then the last 4k they earn will be taxed at 40%

Hope that helps

katarinaO

wrote:

If I understood I shoul be between 6470and 36k and pay around 20%, so thats mean Im paying double, what shall I do?

newlywed

Your tax code doesn't say how much tax you should pay.

It tells you how much money you earn before tax - it's your tax free allowance figure and the same for most people (unless they get company benefits like health care etc).


The tax you pay is dependent on how much money you earn each year and worked out by a computer program updated each year to include the up to date tax details.