Help understanding tax

ryan92

Hello
I've now been in employment for 8 months now and beginning to rack in plenty of overtime. Next month, I'm estimating that before tax i'll earn £1100. April pay was £842 and May should be about £850.

I know I will be paying NI contributions, but when does the tax kick in? Under my previous Emergency code, after I earned £860+ I was taxed ; will it be the same here or will it kick in after my earnings are £10'000. I'm on 1000L.

Finally, if I earn say £11'000 this year, how could that impact on next year ; would I begin to be taxed every month or would the allowance reset again?

Thanks

jem16

ryan92 wrote: »

I know I will be paying NI contributions, but when does the tax kick in? Under my previous Emergency code, after I earned £860+ I was taxed ; will it be the same here or will it kick in after my earnings are £10'000. I'm on 1000L.

Tax is looked at on a monthly basis, not when you reach a set amount. Every month you have 1/12th of your allowances so basically you can earn £833.33 this tax year before paying tax. Tax is also cumulative so each month looks back at what happened the previous month as well.

Finally, if I earn say £11'000 this year, how could that impact on next year ; would I begin to be taxed every month or would the allowance reset again?

Thanks

Each tax year starts afresh. The only way one tax year impinges on the next is if you have overpaid/underpaid tax for some reason.

Delphina

I am giving my answer, based on the fact that the highest rate of tax you pay is 20%.

Based on your code, this financial year, you can earn up to £10,000 before you pay tax, in theory. In practice, in every month that you are paid, one twelfth of your tax-free allowance, which is £833.33, is given to you, anything exceeding that is taxed at 20%. If you earn 843.33 per month gross, your tax is £2.00.


I have a feeling that your emergency code was not BR. If it was BR, then you possibly paid too much tax. What was it? 944L W1/M1 or 944L X, 1050L W1/M1 or 1050L X? When were you on it, for how long, what code was used after that?

Every tax year, you get tax-free personal allowance. It usually goes up a little each year. So from 6/4/14 to 5/4/15, it possibly is going to be £10,000+.

ryan92

jem16 wrote: »

Tax is looked at on a monthly basis, not when you reach a set amount. Every month you have 1/12th of your allowances so basically you can earn £833.33 this tax year before paying tax. Tax is also cumulative so each month looks back at what happened the previous month as well.



Each tax year starts afresh. The only way one tax year impinges on the next is if you have overpaid/underpaid tax for some reason.

Thanks for clearing that up So based on my £1110 wage this month, what could I expect to pay in Tax?

My Emergency tax code was 944L WK1 and I was on it for 6 months

CLAPTON

on 1,110 this month with a tax code of 1000L and assuming no pension payments etc

then you tax is (1,110 - 833) = 267 taxable
so tax 20% of 267 = 54

plus NI which will be
1,100 - 663 = 447 chargeable at 12%
so NI = 447 x 12% = 54


for last tax year you seem to have been charged too much tax and are due a tax refund. phone HMRC is probably the quickest way

ryan92

I will give them a little phone
So the tax I'll pay this month, i'll get it back in April next year?

ryan92

I'm currently sitting at :

Earnings to Date : £643.58
Tax Code : 1000L
NI Cat : D

I also have a pension scheme through work where 5% goes into it..... every little helps as they say!

CLAPTON

blondebubbles wrote: »

That would be the figures in isolation but the calculation would need to take into account gross pay to date and tax already paid.

yes of course but the question was

Thanks for clearing that up So based on my £1110 wage this month, what could I expect to pay in Tax?

ryan92

blondebubbles wrote: »

Is that your taxable pay?
Your net pay?

What period does that cover?

That is my taxable pay for this financial year.

However, for last year
(from September 13- end of financial year) ;

Taxable pay : £3601.65
Tax : £69.49
Pension (FT)
NI employee : £37.55
NI employer : £43.87

Tax Code: 944L WK1

CLAPTON

ryan92 wrote: »

That is my taxable pay for this financial year.

However, for last year
(from September 13- end of financial year) ;

Taxable pay : £3601.65
Tax : £69.49
Pension (FT)
NI employee : £37.55
NI employer : £43.87

Tax Code: 944L WK1

assuming you had no income between april 2013 and september 2013 and no taxable benefits (JSA)
then you should have paid no tax

ryan92

CLAPTON wrote: »

assuming you had no income between april 2013 and september 2013 and no taxable benefits (JSA)
then you should have paid no tax

I was on JSA from the beginning of June until the middle of September. Would this mean the tax was therefore payable?