Am I paying the right amount of tax?

benmiller70

Hi guys,

This may be really silly, but I can't work out if I'm paying the right amount of tax.

On the most current payslip I can find (dated 25.09.15/Week 25 - I get paid weekly). It says my Gross for Tax TD is £11,538.50 and that my Tax Paid TD is £1281.60. My tax code is 1066L.

As far as I was aware, I wouldn't be paying tax until I had earned over £10,060 and then it would be 20% of my earnings. Considering I've only earned roughly £1,500 over my tax-free allowance, shouldn't my Tax Paid TD be more like £300 as it's 20% of that figure? Is that figure correct, but when added to my NI TD (£919.50), it equates to roughly the £1281.60 Tax Paid to date?

I'm not entirely sure how this all works, but do they just tax me and then even it out at the end of the year through a rebate, or through charging me less tax?

Or am I paying the right amount but just not understanding how it's calculated?!

Any help would be much appreciated! My head hurts!

Cheers,

Ben

Stevie_Palimo

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

martinsurrey

£11,538.50 for 25 weeks works out as £24,000 per year

£24,000 less £10,660 is £13,340 (amount to be taxed @20%)

£13,340 @20% = £2,668 (tax paid in a full year)

£2,668 per year is £51.31 per week

£51.31 per week is £1,282.69 for the first 25 weeks of the year.

seems spot on to me

chrisbur

Your tax deducted is spot on, I am afraid as you say you are "paying the right amount but just not understanding how it's calculated"

If you had all of your tax allowance at the beginning you would pay no tax for the start of the year then later you would pay 20% of everything you earned and then later still possibly 40% or 45%.
Instead you get a bit each week in your case about £205 so by week 25 you can have £5129.75 before tax is due so tax is payable on £11538.50 less £5129.75 = £6408.75 tax is paid on whole pounds only so 20% of 6408 is £1281.60 which is your tax figure.

As each tax week comes that £5129.75 increases until week 52 when you get the full year allowance of £10669.88.

The figure you quote is nearer the allowance for a code of 1060L whereas your code is 1066L so a bit higher I would guess you get a laundry allowance or similar.

benmiller70

Ahh that makes so much sense to me now!

Thanks very much for your helpful responses. I can stop thinking thinking there is a governmental conspiracy against me now

Cheers

agrinnall

benmiller70 wrote: »

I can stop thinking thinking there is a governmental conspiracy against me now

Oh there probably is one, just not on how much you're being taxed .