Tax on wages ; unsure how it's worked out!

ryan92

I have a part time job and since April 2013 I have so far earned £2572.35 as I only joined in September. This month I earned £909.89 but have been taxed £36.60 and have £37.55 of NI contributions.

I haven't been taxed in previous months apart from my first month when I was on an emergency tax code.

Can anyone clear this up for me?

Thank you:beer:

dzug1

Haven't done the precise maths but it sounds like you are being taxed on a month 1 basis - ie you get one twelfth of the annual tax allowance each month, with previous months being ignored.


What is your tax code?

jem16

ryan92 wrote: »

I have a part time job and since April 2013 I have so far earned £2572.35 as I only joined in September.

What were you doing from April till September? Did you have another job or were you claiming JSA?

ryan92

jem16 wrote: »

What were you doing from April till September? Did you have another job or were you claiming JSA?

I was at university until the end of May so began claming JSA in June.
I'm on code 944L WK1

jem16

ryan92 wrote: »

I was at university until the end of May so began claming JSA in June.

Your JSA has to be added on to your income from work as it's taxable. Did you hand your P45 from JSA to your work?

I'm on code 944L WK1

Which is the emergency tax code, so you're being taxed on a non-cumulative basis with each week/month being looked at in isolation. Do you wages vary each month?

What tax code were you on the first month?

ryan92

jem16 wrote: »

Your JSA has to be added on to your income from work as it's taxable. Did you hand your P45 from JSA to your work?



Which is the emergency tax code.

What tax code were you on the first month?

I never received a P45 from the JSA . I was on tax code 0T to begin with.

jem16

ryan92 wrote: »

I never received a P45 from the JSA .

You should have. HMRC won't be able to sort out your tax code for this tax year until they receive that as it has the details of your previous income.

How much JSA did you receive?

I was on tax code 0T to begin with.

That's not the emergency tax code. That is a tax code used in the absence of a P45 or P46. Presumably you have now completed a P46 (or similar online version) and said that you were previously on JSA? That is why you now have a 944L Wk1/Mth1 code.

I suggest you phone HMRC and find out if they have the details from JSA yet and see if you can get off the cumulative tax code onto a normal 944L cumulative code. If they don't do it before your March pay, you will have to claim back any overpaid tax later.

Seanymph

Your tax code is a number (944L) which says you can have £9,440 pounds tax free a year.

If the amount you are allowed changes they change the number. Say if you have two jobs, you can ask them to split it and give some allowance to each employer.

HMRC generate that number to tell your employer what 'code' you are on, and what your allowance is - how much you are allowed before they take tax off.

If you leave one job and go to the next (or leave JSA and go to work) you are given a P45 - this document tells your NEW employer what your code is and what you have earnt so far this tax year.

It doesn't give you that amount free of tax and then you start paying - it works out how much you should have each week or month, and that amount goes up during the year - so if you get paid in week 1 (the year starts around April 4th) - week 1 you get 1/52nd of £9440 tax free - then pay tax on what is left.

In your case you got your JSA and when you left you had no paper to give to your new employer (P45) telling them what to tax you.

So they taxed you on OT - which is a made up code really, you paid tax because they didn't know - if in doubt charge full tax says HMRC.

Then because they hadn't been given a code they taxed you on the full amount each month because they have no record of the earlier part of the year.

The person who can now sort it out is HMRC - if you ask them they will send a code to your company (do it quickly though - after the end of the year it gets more complicated to get your tax back).

Your employer will be sent a code, run your wages, and refund you the tax directly - because they will know that now, month 10, you have a larger amount you are allowed tax free, and you haven't had it in wages, so you shouldn't have paid any tax.

After the end of the year a line is drawn and you have to get the money back from HMRC - it's possible but harder.