Boring question, hope I'm in the right place!

RadioMonkey

Hi all, apologies if I'm in the wrong place here, first time poster.

I'm wondering if someone who knows more about the dark art of Income Tax than me might be able to kindly shed some light on this one. I attempted to contact HMRC a couple of hours ago but their automated phone system is beyond awful and I couldn't get through to speak to an advisor.

Anyway here's a brief overview of my situation. I recently trained as a teacher, meaning that the last time I had a job where I paid tax was in July 2014. I haven't paid tax since then as I haven't been earning whilst I did my PGCE. So I started a new teaching job in September, and this is therefore my second month of being paid a salary where I should definitely be paying income tax (as I earn over the tax-free threshold), but there's nothing - just the national insurance contributions and my pension.

Now, in a logical world, I would say that they're not taking the tax as my actual earnings so far in the 15-16 tax year haven't met the level where I should be paying tax yet. Similarly, I've also just realised I haven't been deducted a payment for my student loans either.

However, my understanding of the way HMRC works is that they calculate the tax on a pro-rata basis, and that because my salary WOULD take me over the tax-free threshold in a 12 month period I should be paying the full amount, which they would later rebate if I had overpaid.

For what it's worth, my Tax Code seems to be correct (1060L, which the gov website says is the standard code). I'm just a little puzzled. If anyone would be able to shine some light on this for me I'd be really grateful.
Cheers

buglawton

Could be you are receiving a refund through the payroll as mentioned here:
http://taxaid.org.uk/guides/taxpayers/tax-for-employees/refunds-for-employees

McKneff

It will sort itself out through the payroll given time.
You are not paying tax because you havnt earned enough yet. Its possible you may not pay any till the end of the tax year.


April will see you paying tax every month.


Its pretty easy to understand to be honest. It just needs someone to explain it to you.

chrisbur

I would assume that when you started you either filled in a form or were asked a few questions about your tax position. This would be along the lines of....
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.
OR
C – I have another job or receive a state or
occupational pension

You would have told them that A was the one that applied to you and this would have allowed them to use the emergency tax code (1060L) on a cumulative basis.

This would mean that say for example your first salary fell in month 6 you get 6/12 of your full tax allowance ie about £5300 and if your earnings were below that then no tax is due. This gets increased by about £883 (1/12 of the full allowance) each month and you do not pay tax until your total earnings to date are more than your tax allowance. So when you get your next month you get £6183 allowance and if your total earnings for the two months are still below that then again no tax, and so on until your earnings catch up with your tax allowance.

Your tax code will be looked at eventually by HMRC and may be altered if you have any taxable benefits or anything you can claim for but otherwise will stay on 1060L untill next tax year.

CLAPTON

you may want to consider whether you paid too much tax in 2014/15 as you only worked a few months and so may be due a refund

RadioMonkey

chrisbur wrote: »

I would assume that when you started you either filled in a form or were asked a few questions about your tax position. This would be along the lines of....
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.
OR
C – I have another job or receive a state or
occupational pension

You would have told them that A was the one that applied to you and this would have allowed them to use the emergency tax code (1060L) on a cumulative basis.

This would mean that say for example your first salary fell in month 6 you get 6/12 of your full tax allowance ie about £5300 and if your earnings were below that then no tax is due. This gets increased by about £883 (1/12 of the full allowance) each month and you do not pay tax until your total earnings to date are more than your tax allowance. So when you get your next month you get £6183 allowance and if your total earnings for the two months are still below that then again no tax, and so on until your earnings catch up with your tax allowance.

Your tax code will be looked at eventually by HMRC and may be altered if you have any taxable benefits or anything you can claim for but otherwise will stay on 1060L untill next tax year.

Good explanation, this would make sense! Thank you