Tax Calculation

YorkshireBoy

ctm wrote:

If it has Wk1/Mth1, or an X after it, then ring up the Inland Revenue, state that you have no previous earnings in this tax year, and want to be on a culmulative tax code. That way you will not overpay tax in this tax year.

Good spot. Sorry, forgot about this. I should have known as I had some major problems 2 years ago when I changed jobs because they were using "M1" on my tax code.

ctm_2

YorkshireBoy wrote:

and get a cheque for £1,026.67 (plus interest ) shortly after the 05/06 year end.

Not necessarialy.....

If you do end up on an emergency code, then as yorkshireboy has said, you will overpay tax, and have to claim it back. However, if you claim it back as soon as you get your P60, you will only get the overpaid amount back, you will not gain any interest on it at that point. You will only start to gat interest paid to you by the inland revenue (well, it's actually called supplement, not interest, because interest is taxable). You only have interest (or supplement) paid if a repayment is made after the 31 January following the end of the tax year to which the repayment relates. So, if you overpaid tax in the year ended 5 April 2005, you will not have interest paid if you have the amount repaid before 31 January 2006. The overpaid amount only attracts interest after 31 january 2006.

YorkshireBoy

ctm wrote:

You only have interest (or supplement) paid if a repayment is made after the 31 January following the end of the tax year to which the repayment relates. So, if you overpaid tax in the year ended 5 April 2005, you will not have interest paid if you have the amount repaid before 31 January 2006. The overpaid amount only attracts interest after 31 january 2006.

Damn, you're right again! Just checked my wife's refunds and the ones that attracted interest (or repayment supplement ) were paid much later than the ones that didn't.