First job after university - help needed regarding tax codes

GeneralZod

Hi, I was wondering whether I could get some help regarding tax codes, as I want to find out how much money I will get to take home so that I can budget for rent/food etc. Here's my story:

- I graduated from university in July 2010. Since then, I have been on jobseeekers allowance. I will start my graduate job in March 2011, paying around £25,500 a year

- This is the second job I've ever had. During july to september 2008 (i.e the summer holidays at the end of my first year of university), I worked in a department store. I can't remember, but I don't think that I paid any tax during this job.

- That's pretty much it. I have a student loan to pay back, but I was just wondering if there was any way of knowing what my tax code was? Because I have found some 'tax calculators' online, however these apparently don't give a 100% accurate figure unless you put your actual tax code in.

- I've also heard a rumor that I may not have to pay tax for the first few months of my new job because I didn't work last year (I was at university). I doubt that this is true but I was just wondering whether anybody can confirm

many thanks for your help!

CLAPTON

your tax code for this tax year should be 647L which means you can earn £6475 before any tax is payable ... this will include all earning between 6th april 2010 and 5th april 2011 (and includes JSA)
probably you will have no tax to pay this tax year. however it depends what tax code your employer uses initially... have you given them a P45 from the DWP?

next tax year your taxcode should be 747L unless it changes in the budget

tax calculators will give a reasonable answer for full years (like next tax year) but not part years like this year

your actual take home will also depend upon whether you pay pension contributions and whether they have started your slc deductions as well as tax and NI

GeneralZod

CLAPTON wrote: »

your tax code for this tax year should be 647L which means you can earn £6475 before any tax is payable ... this will include all earning between 6th april 2010 and 5th april 2011 (and includes JSA)
probably you will have no tax to pay this tax year. however it depends what tax code your employer uses initially... have you given them a P45 from the DWP?

next tax year your taxcode should be 747L unless it changes in the budget

tax calculators will give a reasonable answer for full years (like next tax year) but not part years like this year

your actual take home will also depend upon whether you pay pension contributions and whether they have started your slc deductions as well as tax and NI

Thanks for the reply.

By the time I end my claim, it's likely that I will have had 14 JSA payments @ 103.70 = £1451.80

6475 - 1451.8 = £5023.20 tax free allowance

I have a quick question about this £5023.20. According to the tax calculator, take home pay every month (after tax/NI/student loan deductions) is about £1500. Salary every month (i.e nothing deducted, i.e £25500/12 = £2125)

Does this mean that I will receive £1500 at the end of every month?

Or, will I receive £2125 for the first two months, and then in the third month (when the total that I've received has exceeded £5023.20), then I'll start getting taxed and receive a lower amount?

Hope that makes sense! cheers

CLAPTON

firstly the tax year runs from 6th april 2010 to 5th april 2011
so you will pay no tax this tax year

next tax year you start afresh so the tax calculators should give the correct figures (JSA become irrelevant then)
you will have a 7475 tax fre allowance in 2011-12
the allowance is pro-rataed each month so if you salary stays the same during the year your take home will be the same each month

GeneralZod

CLAPTON wrote: »

firstly the tax year runs from 6th april 2010 to 5th april 2011
so you will pay no tax this tax year

next tax year you start afresh so the tax calculators should give the correct figures (JSA become irrelevant then)
you will have a 7475 tax fre allowance in 2011-12
the allowance is pro-rataed each month so if you salary stays the same during the year your take home will be the same each month

cheers, I think I'm starting to understand it

does that mean my paycheck for March 2011 will be £2125? but paychecks after that (april..may..june etc etc) will be lower?

CLAPTON

you will pay NI deductions and maybe pension if applicable but no tax will be due if you are allocated the correct tax code. (which is not certain )
next tax year, i.e. april salary will alas be lower as you will be paying the full tax

GothicStirling

If you don't have a P45, make sure you complete a P46. Otherwise you'll be subjected to months of emergency tax [as my christmas - student - job did.]

Also, they will start to deduct student loan repayments as you will be well over the threshold.

Leodw

Hi I've been told by a friend that your first year of work after university is tax free...

Is this true?

[Deleted User]

No, it's not true. You'll have your tax free allowance and pay tax the same as everyone else.

The other myth is that students don't pay Income Tax- this isn't true, it is just that usually a student with a part time job won't be earning enough in the year to push them over their tax free allowance.

Savvy_Sue

Welcome to the boards, Leo.

Leodw wrote: »

Hi I've been told by a friend that your first year of work after university is tax free...

Is this true?

No, but it's a new one on me!

Fluzz wrote: »

No, it's not true. You'll have your tax free allowance and pay tax the same as everyone else.

The other myth is that students don't pay Income Tax- this isn't true, it is just that usually a student with a part time job won't be earning enough in the year to push them over their tax free allowance.

What Fluzz said. Another 'reason' for the myth is that a student who is ONLY working during vacations AND who signs the appropriate form to confirm that their taxable income shouldn't be above their personal allowance is paid gross, and in 'the good old days' students often did only work during vacations.

Having said that, because the tax year starts on 6th April, and because most graduating students therefore don't start working until half way through the tax year or later, you may not have to pay tax in those first 6 months. BUT it depends what your gross salary is and whether you've already earned money in that tax year.