Tax

tubby210

Sorry if this is in the wrong place, This month my gross income is £2159.79. I have paid £161.09 in income tax, I think this is wrong so I asked my payroll, they said it was correct because you were allowed to earn £10000 before you paid tax. Is this correct?

Ebe_Scrooge

I can't verify the actual amount you've quoted, but your payroll department are correct in saying that the personal allowance is £10K ( for most people ) :

http://www.hmrc.gov.uk/incometax/personal-allow.htm

chrisbur

tubby210 wrote: »

Sorry if this is in the wrong place, This month my gross income is £2159.79. I have paid £161.09 in income tax, I think this is wrong so I asked my payroll, they said it was correct because you were allowed to earn £10000 before you paid tax. Is this correct?

If we assume that this is month 2, that you are on 1000L and last month you received a gross pay of £312 then this month your wages would work out as follows (I have rounded a bit so will be a few pence off).
Gross to date £312 + £2159 = £2471
Tax allowance at month 2 10000 divided by 12 times 2 = £1666
Tax due on £2471 less £1666 = £805
£805 at 20% = £161

If the above fits your details tax is correct, if your details are different give the details and will look at again.

tubby210

chrisbur wrote: »

If we assume that this is month 2, that you are on 1000L and last month you received a gross pay of £312 then this month your wages would work out as follows (I have rounded a bit so will be a few pence off).
Gross to date £312 + £2159 = £2471
Tax allowance at month 2 10000 divided by 12 times 2 = £1666
Tax due on £2471 less £1666 = £805
£805 at 20% = £161

If the above fits your details tax is correct, if your details are different give the details and will look at again.

My Gross Pay for April was £4011 as I received my bonus.

Suarez

I think you have underpaid. What's your tax code?

tubby210

Suarez wrote: »

I think you have underpaid. What's your tax code?

It is 1000L

chrisbur

For month 1 on £4011 you would have paid about £740.00 in tax. This will have included about £209 which was deducted at 40% as you went into the 40% tax band for this wage. As your earnings then went down for month 2 you came out of the 40% band so earnings to month 2 were £6170 and tax allowance £1666 so taxable pay is £4504 which at 20% is about £900 tax due. Tax paid last month was £740 which leaves £160 to pay this month. Figures rounded a bit to keep the maths simple.

So tax for this month is correct you have in effect got a bit of a tax rebate as all the tax paid at 40% in month 1 has been converted to tax at 20% and so reduced your tax bill for this month by a bit over £100. If you earn £2159.79 next month you will pay about £265.00.

tubby210

chrisbur wrote: »

For month 1 on £4011 you would have paid about £740.00 in tax. This will have included about £209 which was deducted at 40% as you went into the 40% tax band for this wage. As your earnings then went down for month 2 you came out of the 40% band so earnings to month 2 were £6170 and tax allowance £1666 so taxable pay is £4504 which at 20% is about £900 tax due. Tax paid last month was £740 which leaves £160 to pay this month. Figures rounded a bit to keep the maths simple.

So tax for this month is correct you have in effect got a bit of a tax rebate as all the tax paid at 40% in month 1 has been converted to tax at 20% and so reduced your tax bill for this month by a bit over £100. If you earn £2159.79 next month you will pay about £265.00.

Thanks for that I am very grateful.