Starting a Job half way through the tax year - what will happen with PAYE?

yorkie1990

Hi,

I'm starting a job next month after graduating university last July, this will be first Job this tax year in the UK (I was working and earning in Ireland this summer but I assume they have a completely different system, so for all intents and purposes this is my first job this tax year).

I have two questions. Firstly, I don't have my previous p45 so as I understand it I should get on the companies case to give me a p46/starter checklist so I can avoid paying emergency tax for my first paycheck?

Secondly, I will be starting this Job halfway through the tax year and although I will earn over the £10,000 tax free income, it won't be by much. It will be a PAYE system so does this mean that they will deduct a very small amount of tax as they estimate my income to be just over threshold. Or will they deduct tax as if this is one months pay of a full tax year, at which point by next April I will have overpaid tax and can claim it back.

I assume it is one of those scenarios at least so if someone could point me in the right direction it would be greatly appreciated.

Cheers.

Edit: I also realise I may well have posted in the wrong forum section - if so, sorry and if anyone could advise me of which forum section would be best for this type of question, it would again be much appreciated

xylophone

http://www.hmrc.gov.uk/incometax/tax-arrive-uk.htm
Give HMRC a ring and explain your circumstances.

SandraScarlett

Hi, and congratulations on your job. :beer: PAYE works on an accumulative basis, so supposing your salary is £24,000 a year. In the month of September, you will earn £2,000 but will have a tax free amount (called Free Pay) of £5000, which is the 6 months from Apr - Sep - so you won't pay tax. You'd have £833 Free Pay each month.


During December, your earnings will overtake the amount of accumulated Free Pay. You'd have earned £8,000 but your Free Pay would be £7497, so you'd pay 20% tax on £503, so just under £101.


During January, February and March you'd pay tax of just over £233 for each month, so by the end of this tax year, you'd have earned 7 months @£2,000 per month, which is £14,000 and paid 20% tax on the difference between your Free Pay and your earnings.


So £14,000, less £10,000 (£4,000) @ 20% equals £800 tax, and you can cross-check that by adding December's tax (£101) plus Jan, Feb and March (each £233 = £699) and you come up with the same figure.


Future years your total wages will be £24,000 and your tax will be £2,800 but I expect you'll get loads of salary increases! Hope this helps.


xx

dippy3103

Sandra- that's a fabulous explanation