1st job and personal allowance

Dr_Crypto

When someone fist starts work is their personal allowance given all at one (i.e. first and subsequent pay packets tax-free) or is is split over the 12 months of the tax year (i.e. 1/12 of it given each month). This is for someone in full time employment on PAYE.

Thanks!

System

It is split over the year so that would be £6475 /12 = £539.58 tax free per month.

So if they had no taxable income prior to starting a job say on 1st August 2010 then they would have 5 months allowances (April, May, June, July and August) to be given to the first months pay at the end of August.

That would mean that the first £539.58 x 5 = £2697.9 of their taxable income would be tax free and if they didn't earn that much any left over allowance would be added to tax free allowances in the coming months until all unused allowances had been used to date.

Dr_Crypto

Fantastic - thanks!

Their salary is £34k so I assume that the first month and some of the second will be taken with the unused allowance.

Will they have to contact HMRC or will it be done automatically?

MrsManda

It gets calculated automatically by the payroll department. If the person doesn't have a P45 (i.e. it's their first job) then they'll fill out a P46 which will be sent to the HMRC who will provide the employer with a tax code which will tell the employer what tax needs to be paid.

HMRC Starting Your First Job

HMRC Starting Your First Job and N.I and Tax