Income Tax

leo2019

I have question about how income tax allowance works.  My estimated income for 2020-2021 will be between £29000 to £30000 gross.  My tax free allowance amount is £13100.  This new tax year started on 6th April 2020 and so far my total gross income has reached £3500.  Obviously it will grow and i earn more.  My question is:  As the they say I don't have to pay any tax on £13100.  Soon as I hit this amount I will have to pay tax on the rest of the money earned.  I am still paying tax every week although I am far away from hiitting £13100.  I don't understand why they tax me on my first tax free income.  anybody please can explain if possible.  
Secondly, how do they setup estimated income?  Can I set up my own estimated income on my online hmrc account.  what will happen if my estimated income will be less than to my actuall income??

Jeremy535897

I take it you are an employee? Your employer is obliged to deduct tax and NIC from your wages, and (in relation to tax) is told how much by your code. If you are paid weekly, for example, every week you can earn 1/52 of £13,100 (about £252) before tax is deducted (NIC starts earlier). That means you don't end up paying all your tax in the later part of the year. It is averaged across the year.

[Deleted User]

leo2019 said:

I have question about how income tax allowance works.  My estimated income for 2020-2021 will be between £29000 to £30000 gross.  My tax free allowance amount is £13100.  This new tax year started on 6th April 2020 and so far my total gross income has reached £3500.  Obviously it will grow and i earn more.  My question is:  As the they say I don't have to pay any tax on £13100.  Soon as I hit this amount I will have to pay tax on the rest of the money earned.  I am still paying tax every week although I am far away from hiitting £13100.  I don't understand why they tax me on my first tax free income.  anybody please can explain if possible.  
Secondly, how do they setup estimated income?  Can I set up my own estimated income on my online hmrc account.  what will happen if my estimated income will be less than to my actuall income??

As you say, you have £13100 ‘tax free’  - that is £1091 per month or £251 each week, if weekly paid. 

So, take your gross weekly or monthly salary, deduct any pension contributions and deduct whichever of the above applies to you. You will pay tax at 20% rate on the balance.

leo2019

Thank you so much for your replay.  Appreciate it very much.
Another thing I have recently noticed that I have been given UTR (unique tax ref.) .  I am not a self employed.  I am an employee and have been paying my tax regularly.  I wonder why they have given this number to me for self assessment tax return.  I rang them up and they were confused as well and he told me it will be removed soon but it's still there as it's more than a month now since i rang them up.  please can thoughts?

[Deleted User]

leo2019 said:

Thank you so much for your replay.  Appreciate it very much.
Another thing I have recently noticed that I have been given UTR (unique tax ref.) .  I am not a self employed.  I am an employee and have been paying my tax regularly.  I wonder why they have given this number to me for self assessment tax return.  I rang them up and they were confused as well and he told me it will be removed soon but it's still there as it's more than a month now since i rang them up.  please can thoughts?

That is odd. Keep on top of it, particularly if you receive a ‘notice to file’ which you much so do.

leo2019

Thanks for your reply.  I recently found a HMRC tax calculator to find out the amount of tax paid for previous years.  I could go back and check for over 5 yeears.  The link to that calculator I found was on this MSE website.  It was brilliant but can't find anywhere that calculator.. so frustrating.. I wish to know whether i paid correct amount or not??.. do they owe me or not??... It was brilliant as it was HMRC calculator and showed me just one years..after that I decided to do the rest of the years later but now i can't find it.... anybody knows where that link is on this website or anywhere else please..

Frogletina

There are several HMRC calculators online. Just Google HMRC calculator to find the one you need

JoeyandChandler1994

Hi everyone, I have a tax code question and have had issues with my tax for many years and not got to the bottom of it with HMRC. I'm hoping someone on here might be able to help me with my PAYE, my tax code is 880L. I have a gross salary of 74k and pension contributions of £246.67. I have private healthcare through work which I have my wife on too.

The calculator states my take home pay should be £4308 but my most recent payslip states £4084.71. I have just finished paying the HMRC back £68.70 per month for the past year and a bit due to under paid tax in the 21/22 financial year. 

Can anyone help me understand why i am £223.29 short each month, and why i always get a letter saying i have underpaid most years and have to have a tax code change to pay back. 

I have struggled for this for so long and would really appreciate some help, and more to the point i really feel i could be owed some serious amounts of money too, if there is a mistake somewhere.

eskbanker

For future reference, it's normally a good idea to start a new thread rather than resuscitating other people's, but as this one is so old it's unlikely anyone will mind!

Best place to start would be to share the breakdown of your tax coding calculation, which will be explained either in a coding notice sent to you or within your online personal tax account, together with all of your income streams (including savings, dividends, etc) and pension contributions (your quoted figure is presumably monthly) and how they're made (pre or post tax).

You should also have an annual statement issued to you by HMRC, which explains how each year's tax is calculated, which you may be able to compare with what you're seeing on calculators in order to identify variances - have you just used the MSE one or others too?

molerat

JoeyandChandler1994 said:

Hi everyone, I have a tax code question and have had issues with my tax for many years and not got to the bottom of it with HMRC. I'm hoping someone on here might be able to help me with my PAYE, my tax code is 880L. I have a gross salary of 74k and pension contributions of £246.67. I have private healthcare through work which I have my wife on too.

The calculator states my take home pay should be £4308 but my most recent payslip states £4084.71. I have just finished paying the HMRC back £68.70 per month for the past year and a bit due to under paid tax in the 21/22 financial year. 

Can anyone help me understand why i am £223.29 short each month, and why i always get a letter saying i have underpaid most years and have to have a tax code change to pay back. 

I have struggled for this for so long and would really appreciate some help, and more to the point i really feel i could be owed some serious amounts of money too, if there is a mistake somewhere.

I suspect you are incorrectly inputting the figures into the tax calculator.  £74K = £6166 pm.  With a code of 880 £1544 tax and £291 NI is due leaving £4331.  Deduct the RAS pension (which I suspect it is as it is only 4% of £6166) of £246.67 leaves £4084.

penners324

Looks correct to me. I've used UK tax calculator app