Tax Code 647L Claim Back

lou.chou

Hello,

I'm all young and naive when it comes to this money business, and I tried doing a search for this particular question, but, while I did find answers loosely clearing up my problem, I didn't find exactly what I was looking for.

I've been on tax code 647L for about 3-4 months now. And I keep reading that I can earn up to a specific amount (a personal allowance amount or something?)

• What is a personal allowance? Will I be able to claim that money back? And if so, when can I do that?
• What happens if I end up earning in excess of that personal allowance amount? It doesn't cancel out my right to claim back or anything? (if that right exists at all, I mean)

Thanks in advance for any help, I'm just rather confused :huh:

Pumpkinface_2

Everybody has an annual personal allowance, an amount up to which they can earn without being liable for income tax. If you are an employee you do not earn up to this amount tax free and then start paying tax on everything, rather your employer will apportion the allowance over the year when calculating monthly income tax deductions.

If somebody leaves or start a job in the middle of the year, this apportioning can go off kilter, in which case that person might be due a rebate.

You say you have been on this code since about April, that seems normal, if you stay in the same job for the rest of the year then you probably will not be due any kind of rebate as I would hope your company is calculating your tax correctly. Always worth checking this at the end of the year IMHO.

lou.chou

Okay, thank you very much for the information.

Is there any way to check right now if it's around the right figure? based on my monthly wage, perhaps?

Any

lou.chou wrote: »

Okay, thank you very much for the information.

Is there any way to check right now if it's around the right figure? based on my monthly wage, perhaps?

That's what your tax code means - 647L means that you can earn £6475 a year before paying tax. So it is correct.

If you want to check back to the figures on your payslip....(I suppose you get paid monthly?)

6475/12= £539.58 a month tax free
Rest of your wages tax 20%

This is just the TAX from your wages, don't forget that there also is NI (national insurance).

IF your tax code changes ever (appart from April every year, as personal allowance slightly increases every year), that is when you need to start asking questions.

lou.chou

Thank you once again for the information.

So, just supposing I got paid, say, £1500 a month. Deducting 539.58 from that I'm left with 960.42. That 960 has 20% tax applied to it?

dzug1

Your personal allowance is embodied in your tax code. If your employer has been applying it correctly (and it's 99.999% certain that he is) then you will have paid the right amount of tax.

Any

lou.chou wrote: »

Thank you once again for the information.

So, just supposing I got paid, say, £1500 a month. Deducting 539.58 from that I'm left with 960.42. That 960 has 20% tax applied to it?

Deducted from it, that is right.

Also just one more note - this calculation is based on you getting your first pay in April - there would be somewhere on the payslip column "tax month" and next to it 1 in April or 2 in May etc...

If you started to work in month 2 - your allowance will be divided by the amount of remaining months in the tax year - therefore only by 11.

This only happens if you were student before or mother at home etc... If you haven't actually earned anything in the previous month(s).

When you go from employer to employer you get P45 and there will be amounts of tax already paid in the year etc and so the next employer will again calculate the correct amount of tax payable for the rest of the year.

On the end of the tax year you get a form called P60 - which is the statement of earnings and tax paid for the tax year. This is one of the most important forms you will ever get as from there you can always tell whether you paid enough/too much tax.

I hope I didn't get into to much detail here and it still makes sense, but as you are young and naive (as you say;)) I thought I might tell you what to expect from your working life:D

Oh, and tax year runs from April to April (6th April to 5th April next year to be precise)

trevormax

lou.chou wrote: »

Thank you once again for the information.

So, just supposing I got paid, say, £1500 a month. Deducting 539.58 from that I'm left with 960.42. That 960 has 20% tax applied to it?

Correct, but you also have to pay NI. The threshold for paying NI is £110 per week or £5,720 for the year. so as this is for a month, you deduct £476 (£5,720 / 12) = £1,024. This is then taxed at 11% which equals £112.

So on a monthly wage of £1,500, you pay:

£192 tax
£112 NI
total deducted £304

Net pay £1,196