Tax code changes a £1000 and i get £260?????? help

boyce26

Recently my workmates and i were moaning about tax as per usual after just getting our wage slips. As i was looking over the codes etc i realised our tax codes had risen to 747l thus entitling us to an extra £1000 per annum tax free..... doing the sums from our old tax codes (647l now 747l) we are getting £5 a week more...... simple calculation of £1000 / 52 = 19.... thus over a year we are only earning £260 of this £1000.... where does the other £740 go???? has our work made a mistake or is this down to the taxman ???

p00hsticks

It's not a mistake by either your employer or HMRC - you've misunderstood what an increase in the tax allowance means.

You aren't getting an extra thousand pounds, you are just not having to pay tax on a thousand pounds. At the basic rate of income tax (20%) you would pay £200 tax on £1000, and that's the extra you are now seeing in your pay packet.

nannytone_2

it isnt actually an extra £1000. i'ts the tax from the £1000 that you are saving.
you are taxed at 20% so thats an extra £20 in every hundred of that £1000.
so you only actually get an extra 2£200 a year in yourpocket.
hope that makes sense.