Tax on Job Seekers Allowance?

thisisalasdair

I was unemployed for around 4.5 months in f/y 2011/12 (September 29th - February 13th). I received JSA up until late January 2012. I recently enquired about whether I was due a tax rebate due to the period of unemployment and I have since been informed that I owe them money!

I probably received JSA for just under four months and HMRC are saying I owe them £506.60 as income tax on JSA. This seems like a huge amount when I consider the benefits I received.

Can anyone clarify? I have no problem paying what I owe, but I do have a problem when it feels like I'm being ripped off...

All advice gratefully received (I'm trying to work this out for myself but struggling!)

McKneff

They work on the whole years income. You don't actually pay tax on your JSA, it is added to your other employment income during the year to get your tax calculation. They then take your tax allowance from this and you pay 20% tax on the rest.

thisisalasdair

So, to confirm what I owe I need to add all income from job one (April 1st - September 28th), job two (February 13th - March 31st)... then add the JSA claimed, and work it out from there?

I'm still a bit confused about when the percentages change. Sorry to sound ignorant.

Thanks for the above.

chrisbur

thisisalasdair wrote: »

So, to confirm what I owe I need to add all income from job one (April 1st - September 28th), job two (February 13th - March 31st)... then add the JSA claimed, and work it out from there?

I'm still a bit confused about when the percentages change. Sorry to sound ignorant.

Thanks for the above.

Is it possible that HMRC have you down as a full year's jobseekers by mistake?

thisisalasdair

chrisbur wrote: »

Is it possible that HMRC have you down as a full year's jobseekers by mistake?

Don't think so. I gave them figures from my P45 which quoted the tax I'd paid up to the point of being made redundant.

I worked it out as 16 weeks on JSA (£908.80)... and the tax on that is £506.60?

From what I can see I paid the correct tax in my previous job (I was there for six years) and current job tax didn't change in 12/13.

Surely, if I've paid the correct tax while I've been in employment the tax on my JSA wouldn't be more than 50%?

McKneff

Add up all your income for the year.

Deduct £8105, (your tax allowance from last year)

You pay tax on the difference.

Compare that with the amount you have actually paid.

Simple as that really. There is no change of percentages ????

You don't pay tax on JSA, it is taxable income when added to other income.

McKneff

thisisalasdair wrote: »

So, to confirm what I owe I need to add all income from job one (April 1st - September 28th), job two (February 13th - March 31st)... then add the JSA claimed, and work it out from there?

I'm still a bit confused about when the percentages change. Sorry to sound ignorant.

Thanks for the above.

Yes, but see my post above.

Horseunderwater

What was your gross income figure on the P45 from your job last year when you got made redundant? What did you get in total JSA? What have you earned to the end of this tax year on your P60 from current employer? Add those 3 amounts together to get total taxable income.
Does this amount come to more than £8105 or less? If less then all tax paid will be due back if more some may be due back. It really is that simple. You pay 20% on any income over the £8105. When you have the total actually due and the tax you paid from both jobs look at the 2 amounts - is the tax paid less than what should have been paid if the JSA is included or more.

thisisalasdair

Horseunderwater wrote: »

What was your gross income figure on the P45 from your job last year when you got made redundant? What did you get in total JSA? What have you earned to the end of this tax year on your P60 from current employer? Add those 3 amounts together to get total taxable income.
Does this amount come to more than £8105 or less? If less then all tax paid will be due back if more some may be due back. It really is that simple. You pay 20% on any income over the £8105. When you have the total actually due and the tax you paid from both jobs look at the 2 amounts - is the tax paid less than what should have been paid if the JSA is included or more.

Thanks for this, useful. I need to do some more number crunching. Will let you know what I find...

sweetietot

For 2011-2012 the tax free was £7475, not £8105