Confused - is tax free allowance monthly??

danielow

I am a student and worked over the summer, earning £10,000 in two months on PAYE. I overpaid my tax (as they assume you are working at this rate for the whole year) and filled out a P50 form saying I am going back to being a student and won't be working for the rest of the year. Some of the tax was repaid to me, but I still ended up paying £900 in tax.

I rang up HMRC and they said this is because the tax free allowance is split into monthly segments. I.e. as I only worked for two months, I only get 2/12 of the annual tax free allowance.

Is this correct?? Or is this just a feature of PAYE so that at the end of they year I could claim back the rest?

It seems a bit unfair. If you are self employed and your earnings fluctuate a lot, then you could smooth out the earnings you declare to maximise your allowance surely?


Thanks for clearing up my confusion!

McKneff

Your annual tax allowance is 9444. It doesn't matter how many weeks/months you have earned, it is worked out annually in the end so you get all of your tax allowance.
If you earned 10,000 you would pay tax only of the difference.

Are you likely to work say in the Christmas holidays

If you work again before the tax year any overpayment should come through payroll.

If it isn't sorted by the end of the tax year, then you reclaim any overpaid tax then, this is easily done over the phone.

chrisbur

Did you tick the section....
"I do not expect to go back to work (including parttime or casual employment) before the start of the new tax year on 6 April" ?

Otherwise I believe you would get one month's tax allowance and then have to claim again for each month following to end of tax year.

CLAPTON

danielow wrote: »

I am a student and worked over the summer, earning £10,000 in two months on PAYE. I overpaid my tax (as they assume you are working at this rate for the whole year) and filled out a P50 form saying I am going back to being a student and won't be working for the rest of the year. Some of the tax was repaid to me, but I still ended up paying £900 in tax.

I rang up HMRC and they said this is because the tax free allowance is split into monthly segments. I.e. as I only worked for two months, I only get 2/12 of the annual tax free allowance.

Is this correct?? Or is this just a feature of PAYE so that at the end of they year I could claim back the rest?

It seems a bit unfair. If you are self employed and your earnings fluctuate a lot, then you could smooth out the earnings you declare to maximise your allowance surely?


Thanks for clearing up my confusion!

is this £900 tax only or NI & tax?

getmore4less

if it was £5k pm then that is £736 NI + £112 tax

macman

Please can you advise what kind of summer job pays £5k per month-because I want one too!

[Deleted User]

macman wrote: »

Please can you advise what kind of summer job pays £5k per month-because I want one too!

Probably a placement (internship) with a technology company like Google, £5000/month would be fairly standard for such a position.

Prothet_of_Doom

citricsquid wrote: »

Probably a placement (internship) with a technology company like Google, £5000/month would be fairly standard for such a position.

£30 an hour approx ? Wow.

macman

My niece is doing an internship at present (not with a tech company). She gets £1,000 a month-and many in that sector pay nothing at all, and won't even refund travel costs.

jamesml

citricsquid wrote: »

Probably a placement (internship) with a technology company like Google, £5000/month would be fairly standard for such a position.

Since when are Google paying £5k a month to an intern?! No way at all, I'm sorry but you are in cuckoo land if you think that is going to happen. Google are in a position where they wouldn't have to pay anything if they didn't want to, they definitely won't be paying £5k.

pjread

I'd guess finance intern rather than tech. Certainly a decent top-up for a student, and comes with a free lesson in "NI is a bit of a con"

Really don't understand why we deal with NI as if it isn't just income tax. Actually, I think all tax should be on expenditure (like VAT) as it'd make evasion far harder and allow you to e.g. tax more on luxury goods than staples. But I'll get off that soapbox now, it's too early.