Income tax & NIC

rkc86

Hey

Just started new job not long ago and need advice about tax. So I'm full-time working 40 hours a week and I understand I get taxed out of my salary.

Can someone explained these tax in a nutshell as I vaguely know about paying a certain amount and this count towards my pension, correct?

The reason I'm a little worried is that when I received my payslip, I've noticed my salary was half (but they paid the correct amount to my bank) and my PAYE tax is -£29.20 but that was "added" to my gross salary on paper (i.e. Salary £641.00, PAYE tax -£29.20 Total = £670.20)

I see no income tax nor National Insurance Contribution. Should I be worried?

Now I didn't ask why they did this yet but is there reason why they would do this? What benefits do they get by doing this? Obviously I want to get a mortgage loan in the future and will this affect this?

Many thanks

HappyMJ

They have just worded it badly. Your net is £641.00 and your gross is £670.20. Not a problem. Paye tax is income tax. It won't affect a mortgage application...they'll use the net figures for an affordability calculation. It should match the figure on your bank statement.

chrisbur

rkc86 wrote: »

Hey

Just started new job not long ago and need advice about tax. So I'm full-time working 40 hours a week and I understand I get taxed out of my salary.

Can someone explained these tax in a nutshell as I vaguely know about paying a certain amount and this count towards my pension, correct?

The reason I'm a little worried is that when I received my payslip, I've noticed my salary was half (but they paid the correct amount to my bank) and my PAYE tax is -£29.20 but that was "added" to my gross salary on paper (i.e. Salary £641.00, PAYE tax -£29.20 Total = £670.20)

I see no income tax nor National Insurance Contribution. Should I be worried?

Now I didn't ask why they did this yet but is there reason why they would do this? What benefits do they get by doing this? Obviously I want to get a mortgage loan in the future and will this affect this?

Many thanks

Assuming that you handed in a P45 with tax having been paid up to the tax month before you were paid by your new employer and the tax code was 944L cumulative or very close to that then, on a gross pay of £641 for the month you would have been entitled to a tax rebate of £29.20. This is often shown as a minus figure on payslips as the tax column is a deduction so showing as -£29.20 in a deduction column results in a plus figure added to the gross. Your tax allowance would have gone up by £787 pounds but your earnings only went up by £641 so you had a reduction in your taxable earnings of £146 (that is £787 less £641) so 20% of that is due back to you, that is £29.20.
If any of my assumptions above are wrong then it is possible some error has occurred, let me have the correct figures and will look at again.
Regarding NI this is looked at on a month by month basis and you only pay it on earnings over £646 in a month, though on earnings over £473 but under £646 you will be treated as having paid it even though you do not actually pay it.

Not sure what you mean by "my salary was half (but they paid the correct amount to my bank)" can you explain?

rkc86

Hi thanks for reply

My monthly income is £1200 after tax and that is paid directly to my bank. When I got my payslip it's shown as £641.00 Are they doing this to avoid paying tax to HMRC?

Thanks

chrisbur

rkc86 wrote: »

Hi thanks for reply

My monthly income is £1200 after tax and that is paid directly to my bank. When I got my payslip it's shown as £641.00 Are they doing this to avoid paying tax to HMRC?

Thanks

No idea what is happening here; you will have to ask your employer.

Teahfc

rkc86 wrote: »

Hi thanks for reply

My monthly income is £1200 after tax and that is paid directly to my bank. When I got my payslip it's shown as £641.00 Are they doing this to avoid paying tax to HMRC?

Thanks

At £641.00 gross you would not pay Income Tax or National Insurance.

rkc86

So is that good or bad? Is paying NIC count towards my pension. Do employers pay some on top of that? Where do income tax goes to?

Thanks.

chrisbur

rkc86 wrote: »

So is that good or bad? Is paying NIC count towards my pension. Do employers pay some on top of that? Where do income tax goes to?

Thanks.

If as you seem to be saying your employer is paying into your bank account a different figure to that which appears on your payslip (you say "My monthly income is £1200 after tax and that is paid directly to my bank. When I got my payslip it's shown as £641.00 Are they doing this to avoid paying tax to HMRC?) you cannot be sure that anything they put on your payslip is being reported to HMRC. You need to sort out with your employer what is happening.

comeandgo

What is your hourly rate? Are they paying you £1,200 exact each month? How many pay slips have you had? How many payments in your bank have you had?

xylophone

http://www.hmrc.gov.uk/working/intro/employed.htm

paddedjohn

OP, have you only started this job a few weeks ago? if so you will have only been paid for about half the month and wont be getting your £1200 until next month.