Help Understanding taxes

CLAPTON

what was your gross

what EXACTLY is your taxcode

Cpu2007

I'm not sure clapton what exactly you mean... isn't 810L the tax code?

the gross is :1666.67

dzug1

810L is the tax code, yes - but I'm guessing from your figures that there might be 1 or M1 (= to be applied non-cumulatively) or something similar after it. Or that you had part time work earlier in the tax year (since last April) that you haven't let on about.

CLAPTON

are there any letters or words after 810L e.g. M1, wk1, nocum or anything at all?


anyway the situation is this


Tax works on a cumulative basis between 6th April one year to the 5th april the next

so currently we are in tax year 2012-13
April is labelled month 1, may is month 2 etc

you have an annual tax free amount of 8105
this is given out in monthly chunks of 8105/12 = 675 per month
however as tax is accumulative over the year any unused allowance is carried forward to the next month

Now lets say you first worked in December 1012 (month 9)

that should mean you can earn (this tax year) 9 x 675 = 6,078 before any tax is due
However you will only get this if your tax code is accumulative
Yours isn't.

Yours is 810L M1 (or equivalent) which means you only receive 675 tax free allowance for the month

so you actually got the following

1. tax was equal to (1666,67 - 675) x 20%
2. NI was equal to (1666.67 - 632) x 12 %
3. student loan was equal to (1666.67 - 1316.25) x 9%

NI and student loan are correct as these are non cumulative and based solely on the month but your tax should have been zero


You need to phone up the HMRC and explain your tax code is non culumulative and thatthis is you first job this year and you haven't claimed any JSA

Cpu2007

Thank you clapton, I understood most of what you said, not because you didn't explain it well but I have some problems grabbing the gist of few things(not a disease just me being dumb lol)

anyway I think I shold have explained my situation better as not providing all the info is also like wasting your time. I apologise about this.

First of all:
I have claimed JSA from september to december, which is when I started the new job.
The tax code is shown as follow: 810L wk1/mth1
ni rate: A
My net pay is: 1313.75
I'm going to put the rest of the info as well:
paye tax 198.00
nic 123.92
student loan 31

================
Who decides whether my tax allowance is or not cumulative?
and what exactly is cumulative? I know the meaning but not sure whether having cumulative is more advantageous or not.
So if it was cumulative and I've started working on the 9th month(Dec), does that mean that at the end of the fiscal year(April) I get the full 8105 amount deducted as tax free from the amount I've earned?
(e.g if I've earned 10,000-8105=1895 - would 1895.00 the amount I'll be or should be taxed on?)
or is it that my free allowance starts from the month I've started to work, in this case 9th month(Dec) which means I have (From Dec to Apr = 4 months ) 4months * 675 = 2700 - is 2700 is that tax free allowance that I'm entitled to?

As my first permanent job and seeing all that money going out in taxes makes me cry

CLAPTON

which part of my previous post didn't you understand?

John_Pierpoint

If it is not all sorted out by 05apr, you can then do your own calculations and get a refund, the alternative is to try to chase it up over the phone.

Try the latter first thing in the morning and you might get through to HMRC .

Expect to be asked questions now about what documents you gave your new employer that explained your taxable benefits received.

I might be a pensioner, but I still remember the fat pay package that came through in my first job after a couple of months - my colleagues seemed to think I should open it and take them all down the pub to celebrate.

Cpu2007

yes, my intention is to call HMRC but want to make sure whether I'm entitled to something or what I'm paying in tax and other is normal, which is what Clapton has helped me with so far.

@Clapton, in my last post I've raised some questions related to the points you made regarding how much I should pay and cumulative or not tax allowance. Some of the info you've provided was based on assumption as I didn't provide all the information so after supplying further details I've asked the following questions:

1)Who decides whether my tax allowance is or not cumulative?
and what exactly is cumulative?
2)I know the meaning but not sure whether having cumulative is more advantageous or not?
3)So if it was cumulative and I've started working on the 9th month(Dec), does that mean that at the end of the fiscal year(April) I get the full 8105 amount deducted as tax free from the amount I've earned?
(e.g if I've earned 10,000-8105=1895 - would 1895.00 the amount I'll be or should be taxed on?)
4)or is it that my free allowance starts from the month I've started to work, in this case 9th month(Dec) which means I have (From Dec to Apr = 4 months ) 4months * 675 = 2700 - is 2700 is that tax free allowance that I'm entitled to?

:A

CLAPTON

q1.
your initial tax code is decided by your employer when you start work based on the information you supply to them and HMRC rules
i.e. P45 from DWP or did you fill in a P46
Your employer sends the info to HMRC who may or may not change the taxcode.

q2 I have explained that already... which part of my explanation did you not understand?
But do note that an accumulative taxcode is the correct code; a non accumulative code is only allocated in 'special' circumstances e.g. a new job, working two jobs, where the facts are uncertain etc.

q3 JSA is a taxable benefit; so for the whole year you are entitled to 8105 tax free but this includes your JSA and your earned income.

q4 I've already explained when your tax free allowance starts and how it accumulates. post 15