What is tax code 647L?

AndrewB1888

i am also on this tax code and i am under 18 and in full time education on my first wage i was taxed £101.88 national insurance tax and nothing on my next wage as far as i knew i wouldnt have been taxed atoll having not made over my yearly allowance and being under 18 and in education ? what should i do ?

dzug1

AndrewB1888 wrote: »

i am also on this tax code and i am under 18 and in full time education on my first wage i was taxed £101.88 national insurance tax and nothing on my next wage as far as i knew i wouldnt have been taxed atoll having not made over my yearly allowance and being under 18 and in education ? what should i do ?

Being under 18 and in education doesn't have a lot to do with it. You are still liable for tax if you earn enough - the only leeway is the timing of it if you work vacations only.

To date you don't have your yearly allowance - .you have one third of it or a little over. You get in stages, not all at once.

Was the tax code the same for both lots of pay? Is there a figure 1 - or W1 or M1 after it?

Mahmood_Reza

dzug1 wrote: »

Being under 18 and in education doesn't have a lot to do with it. You are still liable for tax if you earn enough - the only leeway is the timing of it if you work vacations only.

To date you don't have your yearly allowance - .you have one third of it or a little over. You get in stages, not all at once.

Was the tax code the same for both lots of pay? Is there a figure 1 - or W1 or M1 after it?

All UK citizens (and others), from children to adults are entitled to (currently) have income up to £6,475 tax free in an income tax year. Prior to the introduction of PAYE in 1944 most employees completed an annual tax return (similar to France) allowed and the tax was collected on that basis.
When PAYE was introduced a mechamism was developed to enable employers to deduct the correct amount of tax during the year, step forward the tax code. It works like this
Allowance = £6,475, to turn into a code take off the last number and add a letter to to indicate status, i.e. 647L. When the employer processes the payroll he looks at the the employees tax code and looks at a table where the code reprsents the weekly or monthly tax free pay.
If the employee starts at the beginning of the year the code 647L in the table and 647L = (approx) £539 tax free, they then compare this to the gross salary. If salary for that month is over £539 then tax is payable. In the second month, the employer looks at the code table for month 2 and sees £1,078 they then compare this to the gross salary (for 2 months). If salary for those 2 months is over £1,078 then tax is payable, if not any tax paid in the last month is paid back to the employee.
NOTES:
a. a number of circumstances, such as tax underpaid/errors/overpayments give people a different tax code; (b) HMRC will not tell you if it is wrong; (c) you can go back up to 6 years if you suspect you have overpaid tax; (d) If somene starts partway in a tax year, does not have a P45 the the new employer may give them them a code that either ooperates from when they start, or tax evry penny they earn

Mikeyorks

Is there a point to the OTT history lesson?

Mahmood_Reza

Mikeyorks wrote: »

Is there a point to the OTT history lesson?

Is that a tongue in cheek comment or ANO?
It was as much to explain how the coding system works - I have read a number of posts where it seemed to be a question. There was one historical reference, the main points were the 6 year window for claims, and that mistakes can occur.

Mikeyorks

Simply a question. As the rationale of the response - when quoting dzug1 - seemed a trifle bizarre and with little purpose.

And it if was intended to be of wider interest than the quote? Then it equally seemed out of context when viewed against the fact that most recent contributors to this thread are single posters - who never return. And who, in any event, display a knowledge which recommends simplicity - rather than a history lesson?

zygurat789

Mahmood_Reza wrote: »

All UK citizens (and others), from children to adults are entitled to (currently) have income up to £6,475 tax free in an income tax year. Prior to the introduction of PAYE in 1944 most employees completed an annual tax return (similar to France) allowed and the tax was collected on that basis.
etc etc etc

You omitted the reason why it was brought in.
The government had spent a lot of money (on the war) and had a cash flow crisis, not unlike the current situation, PAYE brought the tax in sooner and gave the govt. a one-off cash-flow boost.
I wonder if they have any other similar tricks up their sleeves at the moment.

TwistedPsycho

Mikeyorks wrote: »

Simply a question. As the rationale of the response - when quoting dzug1 - seemed a trifle bizarre and with little purpose.

And it if was intended to be of wider interest than the quote? Then it equally seemed out of context when viewed against the fact that most recent contributors to this thread are single posters - who never return. And who, in any event, display a knowledge which recommends simplicity - rather than a history lesson?

Ok, who let Mr Grumble in?

I actually thought the response did everything that it needed to:

* Where they get the code 647L from
* How employers distinguish that tax is due
* A little something to show that the response has a little bit of background rather than a 1 line copy and paste that may or may not apply to question directly.

A tick of thanks from me also because I actually learnt something from it.

missworks2jobs

Mikeyorks wrote: »

Is there a point to the OTT history lesson?

Saucer of milk for the poster .........btw I actually found it quite helpful in explaining

John_Pierpoint

Mahmood_Reza wrote: »

Prior to the introduction of PAYE in 1944 most employees completed an annual tax return (similar to France) allowed and the tax was collected on that basis.

I would have thought that, prior to the World War II, most employees did not earn enough to pay any tax at all?