First payslip - no tax?

ashh1992

Hi everyone,

I was hoping someone may be able to help me with something.

I've just received my first pay slip after going full-time at my place of work following a number of years as a student/freelancer. However, upon receiving my first pay slip recently I've seemingly paid some national insurance but no tax?

To give you some background, I filled in a P46 and 'Starters Form' but it was only around a week (maybe only a few days) before my first pay date, so I'm not sure if this had any affect.

I'm on a £23,500 salary - meaning I should receive around 1580 monthly (to my knowledge), after deductions. However, I ended up receiving 1803.98 and paying £154 in NI.

My tax code on my payslip is listed as 1060L.

If anyone could let me know if this is normal, that would be great. Also, if so, can I expect to charged double the tax next month for example? Or should I be doing anything else?

Any help with the above would be greatly appreciated.

Thanks!

chrisbur

What did you select on the starter form A or B?

ashh1992

I'm sorry, I don't understand?

There was no option to select either A or B on the starter form?

I've copied and pasted the form below:

NEW STARTER

To be completed for all new employee


FULL NAME:

---

Mr/Mrs/Miss/Ms

ADDRESS:

---

---

---

Post Code:

---

Date Of Birth:

---

National Insurance No.:

---

Date Started:

---

Department:

---

Salary per Annum:

---

No of days per week:

---

Pay Frequency:

---

(weekly, monthly, forthnightly, 4 weekly)

Pay Method:

---

(cash, BACS, autopay, cheque,)

Bank / Building Society Details (if applicable)

Name of Bank:

---

Address:

---

Name of Account:

---

Sort Code:

---

Account Number:

---

Ref. No.:

---

(if Building Society)


P45/P46:

---

NB
Please ensure employee produces P45 on his/her first day of work, if no, please complete P46.
Absence of P45 or P46 will result in Basic Rate Tax code being operated. Please ask all employees to provide either of the following: P60, UK or EEA Passport, British Birth Certificate, work permit and take photocopy of the relevant document.


Signed:

---

chrisbur

In this case the option would be on the P46.
A – This is my first job since last 6 April and
I have not been receiving taxable Jobseeker’s
Allowance or taxable Incapacity Benefit
or a state or occupational pension.
OR
B – This is now my only job, but since last 6 April
I have had another job, or have received
taxable Jobseeker’s Allowance or Incapacity
Benefit. I do not receive a state or
occupational pension.

ashh1992

Ah, I see!

I chose Option A as I've been studying for the past 3 years and freelancing in my spare time.

What can you gauge from this?

theoretica

If you are unemployed for 6 months (to make the numbers easy) and then have a job for 6 months you get the entire year's tax allowance in half the time - so double each month. However, if you also have self employed income from your freelancing this year you will find your tax allowance has been used up by your salary and need to put more money aside to pay the income tax on the self employed work.

ashh1992

To be clear, what should I be doing/expecting based on the info I've given?

If I haven't paid the tax, is this a mistake on my part/will this be automatically rectified?

In case it was of any relevance, I was earning £500/month freelancing prior to going full-time at the current company.

chrisbur

ashh1992 wrote: »

Ah, I see!

I chose Option A as I've been studying for the past 3 years and freelancing in my spare time.

What can you gauge from this?

Option A allows your employer to use the emergency tax code of 1060L on a cumulative basis. This means that as at month 6 you have a tax allowance of £5300 which will increase by about £883 each month until month 12 by which time you will have the full £10600 allowance. You will not pay any tax until your earnings exceed your tax allowance.

The emergency tax code is the basic tax allowance everyone gets so may well be the tax code you eventually get but it may be different if for example you get any taxable benefit eg health insurance,company car, with your job.

When you do your self assessment for freelancing work you will need to complete the employment pages with your PAYE details and tax will be payable on those freelancing earnings. You may be able to pay the self employed taxes by an adjustment to your PAYE code, this was the case a few years back and may still be, off-hand I don't know but if it is available the self assessment will advise.

ashh1992

Thanks for your help, Chris! So, to confirm, I will continue to not pay tax until the £10,000 threshold is reached and then will pay tax as normal?

Also, was it right for me to have selected Option A on the P46? As I was freelancing before (I wasn't sure if that was considered having a job within the period noted).

Cycrow

ashh1992 wrote: »

Thanks for your help, Chris! So, to confirm, I will continue to not pay tax until the £10,000 threshold is reached and then will pay tax as normal?

Also, was it right for me to have selected Option A on the P46? As I was freelancing before (I wasn't sure if that was considered having a job within the period noted).

Not exactly, tax is worked out cumulatively. So each month you will get 1/12th of your tax allowance. So £883 each month, this is added on each month from April.
Your earnings each month is also added together giving you a running total for the tax year.
These are then used to work out how much tax you should have paid so far for the year. You are then taxed the difference between this value and the actual amount you are paid.

So if you are paid nothing in april then £1000 in may.
Your total would be £1000, but your allowance would be £1766 (2 months) so you would pay no tax, even thou £1000 is higher than your monthly allowance. Eventually your cumulative pay will go over your cumulative allowance, which is when you will start to pay tax

LittleVoice

When you say "freelance", do you mean self-employed where you invoice your clients?


How long have you been doing this? Did you notify HMRC?