I Need Help With My Tax Code

liam191

Thanks for the info...i'll be all prepared for my first day now, cheers everyone

jake143

Hi, Clapton thanks for the excellent explanation of the tax code 543L.

I have some confusion after receiving my first payslip.
First of all how did you count liam191's NI in above post.

''but you pay NI contributions
2717 - 455 = 1778 x 11% = £195!!!!!!!!!!''


I have just started new job on 25th feb 08.
But for some reason they did not pay me in march and gave two months + 4days' salary on 18th April.

Here are few figures from my first payslip which I dont understand how they work out. Please help.

Yearly package 14116.
my Total taxable payment(gross) from 25/02 till 30/04 = 2622.

Tax charged: 433
NI charged: 238
Net pay: 1949 [for bit of feb, whole march and whole april]

Tax code:543L.

Can you explain me how they have worked out tax, NI and taking the example of MAY 08 payment, can you work out for me how much i will get. So that in future I will be able to workout my self.

Thank you.

CLAPTON

based on your figures

your gross pay is 2622.. the HMRC will tax this at 2008/9 rates as they consider the income occurs in the tax year you are paid even if some was earned last tax year.


you get 1/12 of your personal allowance tax free .i.e. 1/12 of 5435 and the rest is taxed at 20%

so
2622
less 453 (i.e. 1/12 of 5435)
= 2169
so tax = 433 (i.e. 2169 x 20%)

NI is gross pay less 453 (lower earning allowance) x 11% so
2622 - 453 = 2169 x 11% = 238

hence take home pay is 2622 - 433 - 238 = 1949



Next month's the calculation goes something like this

for tax ... this is a 'cumulative tax ' and is recalulated each month on your total earning to date:

normal monthly pay = 14116 /12 = 1176

total pay to date = 2622+ 1176 = 3798 (i.e. april and may)
you can earn 2/12 of 5435 tax free = 905 (two month worth of allowances)
so total taxable = 3798-905 = 2892
at 20% tax actual = 2892 x 20% = 578
but you paid 433 last month
so actual tax this month is 578-433 = £144

NI is not accumulative so its simple
1176-453 = 723 at 11% = £79

so take home 1176 - 144 - 79 = 952


also I would suggest you send a copy of your P45 or last pay slip from your previous employer to the HMRC and ask for a refund as you have probably paid a little too much tax


PS in future its probably best to post this sort of question on the taxation board as you'll get more responses there

jake143

thats a genius calculation. will help me forever, cheers!!