When do start paying tax? Not earned the threshold yet.

EssexGirl wrote: »

Probably a really daft question but here goes..... I got a promotion in January this year. I went over the tax threshold and paid tax. That's fine, I knew this would happen.

This new job means for the first time in years (part time working mum) I will be earning more than my tax allowance. But I'm already paying tax. I assumed that I would only pay tax once I've actually earned £11,850, which wouldn't be until January 2019 or so. Or do they base it on what I will earn this year in total and tax from the beginning?

If you think about it the idea of paying tax only after you reached the threshold would result in a massive difference in your take home pay before and after reaching that threshold.
The actual system used gives you a better spread of tax over the year.
Taking someone who is monthly paid as an example and assuming that they are at work all year.
Month 1 they get 1/12 of their tax allowance and pay tax on anything over that. If under that 1/12 then no tax is due.
Month 2 they get 2/12 of their tax allowance which is put against their total taxable earnings for both months and anything over this 2/12 is taxable. Actual tax paid is this tax due figure to date less the tax paid in month 1
Month 3 they get 3/12 of the allowance set against earnings for all three months and again tax due is calculated from which is deducted tax paid so far to get tax to be paid for month 3.
This goes on until month 12 is reached when they get the full tax allowance to go against their full earnings to show their full tax due for the year. The tax already paid in months 1 to 11 is deducted from this to give their final months tax due.
If for example say at month 6 they had no or very low earnings it might happen that their tax due at that point was lower than their tax paid up to month 5 then the difference would be repaid to them as a tax rebate.

In this way tax is spread evenly through the tax year (or as evenly as possible ) just going up and down as your earnings go up and down.

Occasionally you can get a variation in tax that seems to be out of this pattern but this is caused by large variations in earnings; they appear a bit strange but are all part of the self correcting nature of PAYE.
Provided that your tax code is correct at month 12 your tax you have paid will be correct.

EssexGirl wrote: »

Thank you for the explanations. It makes perfect sense when you know the answer. Just a bit disgruntled to be bringing in similar to what I was earning pre promotion because I've gone over the tax and ni barriers.

You should still be taking home more. You should get around 65% (rounded for easier maths) of your pay rise in your back pocket.