New Income Tax Checker

Browser123

Hello,

This tool seems very useful and pleasantly simple. It correctly predicted that I should not pay any tax as my part time job earnings are below the threshold.

However, it predicts I should pay a small amount of NI contributions, about £3 a month. My employer is not deducting any NI - this might be due to the pension scheme I am in, it is salary related but I don't know if contracted out or in. It would be nice if pension membership does effect NI payments, to include an option in the calculator.

Also, does anyone know if I will be counted as contributing this year for state pension reasons? I earn above the lower earnings threshold but it seems not enough for me to pay NI. Is my employer paying anything?

chrisbur

Browser123 wrote: »

Hello,

This tool seems very useful and pleasantly simple. It correctly predicted that I should not pay any tax as my part time job earnings are below the threshold.

However, it predicts I should pay a small amount of NI contributions, about £3 a month. My employer is not deducting any NI - this might be due to the pension scheme I am in, it is salary related but I don't know if contracted out or in. It would be nice if pension membership does effect NI payments, to include an option in the calculator.

Also, does anyone know if I will be counted as contributing this year for state pension reasons? I earn above the lower earnings threshold but it seems not enough for me to pay NI. Is my employer paying anything?

It sounds to me as if it is contracted out. If the NI rate shows on your payslip it will be D if contracted out and A if not contracted out.
If you are contracted out NI starts at around £626 a month instead of £606 if not contracted out. These figures are from the NI tables if your employer is using the exact percentage method they will be slightly different but contracted out contributions will still start a little later than not contracted out.
Provided that you earn at least the lower earnings limit you will be counted as having paid NI for pension and any benefits that need it.
Assuming that you are contracted out then your employer would be getting a small rebate rather than paying.

Browser123

That is good to hear - thanks for the advice

gazza26

jem16 wrote: »

That will make the difference. If your pension payment come out of your gross salary, you will pay less tax as the pension payment is taken out and then you are taxed. Most of these checkers assume the pension payment is from your net salary.

Post up figures and we can check.


Thanks Jem16 really grateful for your response.

Have been going through hideous amounts of pension guff. It would seem that when my company started a new pension scheme back in about 2003, my pension contribution would be taken from my net salary and taxed but the tax would be reclaimed by the pension provider, but although written into our statement, my ignorance assumed that the pension provider were sorting it out, but it would appear that I should have been doing a tax assessment form every year to claim back the tax I had been paying at 40%. I had stupidly worked out that my pension payment took me below the 40% level and therefore didn't do this but going back through all my P60s with the income checker it would appear that I have been paying at 40%,not much but enough to be upset each year. Now I'm in a bit of a stress as I could potentially lose the child benefit as my original intention was to increase my pension contribution to keep myself under this limit as I guess the goverment will just put in a very rudimentary system and as I am paying 40% that will be it despite the fact that I could be paying exactly the same in to pension as the next guy but as his pension is taken from his gross salary he'll keep the child benefit.
Mad panic in our household now, need to go and see a financial advisor thinking about reducing what I pay in to my pension and setting one up for the non working wife that gets taken from my gross salary. I must say that I have learnt more about pension in the past two days than in my previous 42 years and I thought I was financially savvy!

Anyway ambled on enough thought I would just tell you where I was at as you were so kind to respond to my plea for help!

I hope by posting it may bring someone attention to look into their pension as I can't believe I'm the only one!

jem16

gazza26 wrote: »

Have been going through hideous amounts of pension guff. It would seem that when my company started a new pension scheme back in about 2003, my pension contribution would be taken from my net salary and taxed but the tax would be reclaimed by the pension provider,

That's correct but the pension provider is only able to claim the basic rate tax relief.

but although written into our statement, my ignorance assumed that the pension provider were sorting it out, but it would appear that I should have been doing a tax assessment form every year to claim back the tax I had been paying at 40%.

Basically the pension provider claims 20% and you claim the other 20% via your tax return or via a tax code change by contacting HMRC.

You can claim back 6 years so worth doing now at least.

Now I'm in a bit of a stress as I could potentially lose the child benefit as my original intention was to increase my pension contribution to keep myself under this limit

A sensible idea.

as I guess the goverment will just put in a very rudimentary system and as I am paying 40% that will be it despite the fact that I could be paying exactly the same in to pension as the next guy but as his pension is taken from his gross salary he'll keep the child benefit.

Nobody knows exactly how it will work yet.

Mad panic in our household now, need to go and see a financial advisor thinking about reducing what I pay in to my pension and setting one up for the non working wife that gets taken from my gross salary.

That won't work I'm afraid. You can give your wife the money to make the contribution but the money must come directly from your wife. As she is non-working she will only be able to pay a maximum of £3600 gross or £2800 net.

gazza26

Thanks Jem16, you certainly know your stuff. Have got a lot of thinking and form filling to do should keep me quiet for a bit! Really appreciate your comments.

steveo11

I've just received a bonus this month but have been taxed on it at the higher rate - is there any way to claim it back?

John_Pierpoint

Assuming that you are on PAYE, the system will realise over the coming months that you are not earning at that rate regularly and reduce your payments in future months so as to (theoretically) end the fiscal year on 5th of April 2013 having charged you the correct tax for the year.
Do the calculation a bit nearer the time and consider if you want to mitigate your tax take by (say) making additional payments towards your pension.

fatfei

How can I see if I'm being taxed 40%?

jem16

fatfei wrote: »

How can I see if I'm being taxed 40%?

For those with a tax code of 810L you would need to earn over £42,475 to be paying 40% tax.