New job, tax code 647L- but no tax taken off?!

thunderstorm654

Just started a new job and got paid for the first time today. I got my payslip and I haven't been taxed at all, but paid NI. I haven't earnt any money this tax year so far as I was at university without a job. My employer said its cumulative but I don't understand- so I wont pay any tax until I get to the personal allowance? That seems stupid - surely I'll end up owing tax?

I don't want to pay MORE in future. I thought it was spread out over the year; at least thats how it always worked in any other job I've had. I'm on 20k so obviously going to have to pay tax every month.. really confused can someone clear this up?

Cheers

McKneff

you wont pay any tax for a number of months until your tax allowances catches up. It is spread over the year (but for you its spread over only 7 months because you havent worked) so as you have not used up your allowance since April you can just relax for some time to come.


Enjoy........

I'm sure someone will come along with exact figures but till then, dont worry about it. You wont owe the HMRC a thing.

p00hsticks

Yes, I think you're right and you shoudl be paying tax. This is how I believe it should work

If you get paid at the end of the month, and started at the beginning of October then you'll be working for six full months in this tax year (up to April 5th 2010) - so your tax allowance of around £6470 pounds (I can't remember the last digit) should be spread evenly over those six months, giving you a tax allowance of around 6470/6 = £ 1078.33 per month. so anything over this that you earn in a month should be taxed.

If you're on £20,000 a year then thats around £1,666 a month, so you should be paying tax on around £600

Any

As McKneff says - you will not be paying any tax until you catch up.
Your allowance is allocated monthly or weekly, depending whether you get paid monthly or weekly.

Because you didn't get paid this tax year at all yet, first you need to catch up with your allowance - I suppose that this payslip is for tax month 7?? So...
6 x 6475/12 = £3237.50 you can earn before you start paying tax until Oct. Obviously you will still not catch up next month, but you will pay little tax the month after. And from then on, you will pay tax on anything you earn in the month over £539.58.

Over the year it will then work out that you have not paid tax for £6475 of your earning and paid tax on everything else.

CLAPTON

so there you have it ..two different views

however, the key here is that tax is cumulative i.e. it depends upon your earnings from 6th April to date while NI is based only on this months salary (and is NOT accumulative)


so Any and McKneff are correct and I'm afraid pOOhsticks and lincdan86 mis-understand how the cumulative tax rules apply

Valli

thunderstorm654 wrote: »

I thought it was spread out over the year;

It is spread out over the year but you have about £3200 'unused so far' tax allowance for this year - because although you will only have worked for half a tax year you still get THE full tax allowance (ie a full years) to use against your total income for the year.

So for THIS year you earn £10K but have £6475 tax allowance - so you will only pay tax on about £3500. Next year you'll be taxed on about £13500.

NI is different - it's calculated against weekly income.

So don't get used to that higher wage packet!

p00hsticks

CLAPTON wrote: »

so Any and McKneff are correct and I'm afraid pOOhsticks and lincdan86 mis-understand how the cumulative tax rules apply

Apologies - i'm obviously mistaken, as is borne out by what the OP is actually seeing. You learn something new everyday...

CLAPTON

p00hsticks wrote: »

Apologies - i'm obviously mistaken, as is borne out by what the OP is actually seeing. You learn something new everyday...

No apologies needed.... it's all about learning together heere.

McKneff

CLAPTON wrote: »

No apologies needed.... it's all about learning together heere.

What a nice thing to say = that goes for me too.

Annie