Tax amount

Kitty777

Hello,
A few weeks ago I asked how much tax I would pay on my new wages. I used the online calculator, and then was surprised when it was different on my payslip. I had not paid any tax at all even though I was earning over 1,000 a month.

I asked payroll about this, and after a bit of confusion with them as well they suggest it was because I wasn't anywhere near my threshold of 10,600 for this year. Up until september I had earned around 3,000 due to only working 16hours.

My payslip states that all of my wages was taxable, but wasn't taxed. NI went out however but I think that is calculated weekly?

So my question is, when will they start taking tax? When I get towards the threshold?

I am also starting a new job next month, and still won't be meeting the 10,600 for this year. Will I not pay any tax until next year, or will I pay it and then get a refund? I am just so confused!

Valli

While your wages might all be taxable the tax you pay does depend on your tax code.

What tax code is shown on your payslip?

And you can edit the title of your thread by going into 'edit' then 'go advanced' where you will see the option to edit. HTH

Kitty777

My tax code is 1060L

And thank you

engineer_amy

If there is no "W1/M1" or an X after your tax code, then you are on a cumulative tax code. Either you provided your new employer with a P45, or they have received a coding notice from HMRC showing the tax code you should be on.


The payroll programme will take into account your total earnings for the tax year so far, and the allowance accrued to date, and you will only pay tax on the earnings over the allowance.


So up to the 5th October (6 months of the tax year) you can earn £5300 before you pay tax. If your earnings to date are £3000 from a previous job, and £1000 from this job, then you will not have to pay tax on it. If you continue to earn £1000 for the next 6 months, then you still wont meet the threshold to pay tax.


The only difference to this calculation is if your new employer puts you on a non-cumulative tax code. This will take each months earning in isolation and tax you accordingly i.e. not account for earnings to date. At this point you will pay tax on everything above £883.33 per month. If this happens, you would be entitled to a tax rebate after the year end, if your earnings remain low.

National insurance is calculated monthly, however the threshold is lower than that for tax, and is non-cumulative.

jobbingmusician

Brilliant explanation from engineer amy, and here's a little table showing you how much you can have earned in total since April 1st before you start to pay tax. Each month, if you haven't exceeded this total, you won't pay tax. If you have exceeded the total, you pay tax only on the bit that exceeds the total.

April £883.33
May £1,766.67
June £2,650.00
July £3,533.33
August £4,416.67
September £5,300.00
October £6,183.33
November £7,066.67
December £7,950.00
January £8,833.33
February £9,716.67
March £10,600.00

Kitty777

@jobbingmusician

Thanks for that, it is such a good way to look at it really helped!