Personal Allowance to rise by £1,000--I dont understand....

tracey_nacey

Sorry to barge in but i thought might be a good place to ask. I am confused about personal tax full stop.

Do they spread your personal tax out evenly over the full tax year so i will get taxed about the same for the whole year.
Or do they take into consideration your earnings before tax.

I get paid gross £1056.00 a month £103 is tax will this stay at the same for the whole year (without overtime and things as i do not do that)

Or will it be when i reach £6475 gross pay i will pay the full 18%.

As i worked it out i only pay tax for 21 hours i work. i work 40hour week. is that all they base it off? as then it will take me a year to reach my personal allowance..... As i would die if i have to pay 18% after 6 1/2 month

Thank you for any replies

tracey

mjm3346

It is spread over the year, so you get almost £540 a month before you start to pay tax and it is 20% on the rest.
So approx figures are £1056 - £540 tax free = £516 to be taxed at 20% = £103

zarazara

£6475 is the amount of money you can earn in a tax year [eg April 6th 2010 to April 5th 2011, NOT January to Dec] before you have to pay Income Tax. Income tax rate is currently 20%. So,anything you earn OVER £6475 is taxed at 20% [ there is also higher % for well paid workers] So ,for example, if you earn £6575 in a tax year you will pay £20 income tax. --£100 in excess of the tax-free personal allowance taxed at 20% =£20-- There are also National insurance contributions to pay too.
However,your tax payments are spread over the year, otherwise people would have some months with lots of money and some months without, its to even it all out for people to make their budgeting easier and to make sure HMCR get their payments too.
Hope this helps.

suso

tracey_nacey wrote: »

Sorry to barge in but i thought might be a good place to ask. I am confused about personal tax full stop.

Do they spread your personal tax out evenly over the full tax year so i will get taxed about the same for the whole year.
Or do they take into consideration your earnings before tax.

I get paid gross £1056.00 a month £103 is tax will this stay at the same for the whole year (without overtime and things as i do not do that)

Or will it be when i reach £6475 gross pay i will pay the full 18%.

As i worked it out i only pay tax for 21 hours i work. i work 40hour week. is that all they base it off? as then it will take me a year to reach my personal allowance..... As i would die if i have to pay 18% after 6 1/2 month

Thank you for any replies

tracey

its split evenly through the year. presuming you are on a code of 647L then you can approx £540 per month and then you pay tax at 20% on any earnings above that.

not sure where you get 18% from, I can't remember income tax being a rate of 18% in my lifetime.

next year the amount you can earn before paying tax will go up, and it will be split in 12 equal monthly amounts, (or 52 if your are paid weekly)

John_Pierpoint

Could the Original Poster be getting confused about the new Capital Gains Tax system that starts at midnight tonight.
Any capital gain will now get added on to your normal income at the end of the tax year. The gain is taxed at 18% until it breaks through the higher paid barrier at which point the excess gets taxed at 28%. There is still the existing Annual Exempt Amount (or nil rate band) of 10,100 that is tax free.
(They wanted to make the rate higher but the economic experts said the sale of assets would freeze up and the tax collected would go down in total).

tracey_nacey

Thank you that is what i needed to know phewww i thought i would have to pay higher tax soon but should just stay at £103 for me for the rest of the year thank you.

OH! i am sorry i got told it was 18% hahahah just shows how much i know lol