Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • bea.watts1
    • By bea.watts1 14th Jun 19, 2:09 PM
    • 2Posts
    • 0Thanks
    bea.watts1
    Tax treatment for first job
    • #1
    • 14th Jun 19, 2:09 PM
    Tax treatment for first job 14th Jun 19 at 2:09 PM
    Hi everyone,

    I have a question I am hoping someone can answer!

    I am starting my first job in August (yay!). I am trying to do some financial planning but I am a bit confused about how my salary will be treated for tax purposes in my first year.

    As I start in August I am missing the first 4 months of the year (and haven't earned anything in that time). Given that, how will my salary be taxed? I can see three options:

    A) for the remainder of my first financial year I am taxed a lower amount on my monthly pay cheque which takes account of the four months I wasn't working.

    B) I am taxed based on my full annual salary, which means I will overpay, but will then get a tax rebate at the end of the 2019/20 tax year.

    C) some option I haven't considered!

    If anyone knows the answer to this that would be very helpful.

    Thanks!
Page 1
    • Dazed and confused
    • By Dazed and confused 14th Jun 19, 2:27 PM
    • 5,388 Posts
    • 2,860 Thanks
    Dazed and confused
    • #2
    • 14th Jun 19, 2:27 PM
    • #2
    • 14th Jun 19, 2:27 PM
    Sort of A. Or C.

    You will be taxed in the same as everyone else.

    Providing you complete a new starter declaration with your employer (you can probably have a look at this on gov.uk) and can sign statement A them you will be put on the emergency tax code on a cumulative basis.

    This means you will get £1042 of your tax free allowance each month so the first time you get paid in this tax year you can earn £5,212* before any tax is deducted.
    * I'm assuming monthly pay and a first payday in the month to 5 September 2019.

    Move on a month and the £5,212 becomes £6,254 and so on.

    So you could have several months pay before you exceed your accumulating Personal Allowance and actually have any tax deducted.
    • xylophone
    • By xylophone 14th Jun 19, 2:32 PM
    • 31,328 Posts
    • 19,419 Thanks
    xylophone
    • #3
    • 14th Jun 19, 2:32 PM
    • #3
    • 14th Jun 19, 2:32 PM
    https://forums.moneysavingexpert.com/showthread.php?t=5873297

    https://www.taxguideforstudents.org.uk/working/employed/first-time-workers
    • unholyangel
    • By unholyangel 15th Jun 19, 12:38 PM
    • 13,974 Posts
    • 11,226 Thanks
    unholyangel
    • #4
    • 15th Jun 19, 12:38 PM
    • #4
    • 15th Jun 19, 12:38 PM
    Sort of A. Or C.

    You will be taxed in the same as everyone else.

    Providing you complete a new starter declaration with your employer (you can probably have a look at this on gov.uk) and can sign statement A them you will be put on the emergency tax code on a cumulative basis.

    This means you will get £1042 of your tax free allowance each month so the first time you get paid in this tax year you can earn £5,212* before any tax is deducted.
    * I'm assuming monthly pay and a first payday in the month to 5 September 2019.

    Move on a month and the £5,212 becomes £6,254 and so on.

    So you could have several months pay before you exceed your accumulating Personal Allowance and actually have any tax deducted.
    Originally posted by Dazed and confused
    Genuinely curious....is there a reason you're referring to a cumulative code (especially a 1250L one) as an emergency tax code?
    Money doesn't solve poverty.....it creates it.
    • chrisbur
    • By chrisbur 15th Jun 19, 1:03 PM
    • 3,263 Posts
    • 1,776 Thanks
    chrisbur
    • #5
    • 15th Jun 19, 1:03 PM
    • #5
    • 15th Jun 19, 1:03 PM
    Genuinely curious....is there a reason you're referring to a cumulative code (especially a 1250L one) as an emergency tax code?
    Originally posted by unholyangel
    The emergency tax code (which is currently 1250L )can under different circumstances be applied on a cumulative or non-cumulative basis.

    The GOV.UK site of course says
    "If you’re on an emergency tax code your payslip will show:

    1250 W1
    1250 M1
    1250 X"

    This is the GOV.UK site over-simplifying things to the point of being mis-leading as it often does.
    It should have an L
    These are only some of the ways that different payroll programs show non-cumulative emergency tax codes
    The emergency tax code is not always applied non-cumulative
    • unholyangel
    • By unholyangel 15th Jun 19, 1:43 PM
    • 13,974 Posts
    • 11,226 Thanks
    unholyangel
    • #6
    • 15th Jun 19, 1:43 PM
    • #6
    • 15th Jun 19, 1:43 PM
    The emergency tax code (which is currently 1250L )can under different circumstances be applied on a cumulative or non-cumulative basis.

    The GOV.UK site of course says
    "If you’re on an emergency tax code your payslip will show:

    1250 W1
    1250 M1
    1250 X"

    This is the GOV.UK site over-simplifying things to the point of being mis-leading as it often does.
    It should have an L
    These are only some of the ways that different payroll programs show non-cumulative emergency tax codes
    The emergency tax code is not always applied non-cumulative
    Originally posted by chrisbur
    A cumulative code is a standard code though, especially a 1250L. Thats not to say it couldn't be wrong, but its not an emergency tax code like non-cumulative ones.

    Those are used because theres an oddity - such as being unsure if another employer has given you personal allowance or how much, what you've earned/paid in tax so far, you've underpaid during that current year etc. There are unknowns and thus, emergency tax code.
    Money doesn't solve poverty.....it creates it.
    • Dazed and confused
    • By Dazed and confused 15th Jun 19, 1:50 PM
    • 5,388 Posts
    • 2,860 Thanks
    Dazed and confused
    • #7
    • 15th Jun 19, 1:50 PM
    • #7
    • 15th Jun 19, 1:50 PM
    The "emergency" bit is really just the way the tax code is used.

    The emergency tax code is 1250L.

    Operated on a non-cumulative or week1/month1 basis.
    • unholyangel
    • By unholyangel 15th Jun 19, 2:30 PM
    • 13,974 Posts
    • 11,226 Thanks
    unholyangel
    • #8
    • 15th Jun 19, 2:30 PM
    • #8
    • 15th Jun 19, 2:30 PM
    The "emergency" bit is really just the way the tax code is used.

    The emergency tax code is 1250L.

    Operated on a non-cumulative or week1/month1 basis.
    Originally posted by Dazed and confused
    This is my point though. The emergency is because your employer is unsure what is the correct tax code. They need a code to process payroll but cannot process payroll without a code.

    If statement A is used correctly then that would be the correct code for the employer to use for the first wage.

    If statement B is used correctly, it may not be the correct code for the employer to use so hence the emergency.

    It is only non-cumulative codes that are emergency tax codes. Again, it not being an emergency tax code doesn't mean its not potentially wrong. They really should just call it a temporary tax code but that would likely cause confusion because technically, all tax codes are temporary.
    Money doesn't solve poverty.....it creates it.
    • bea.watts1
    • By bea.watts1 16th Jun 19, 9:15 AM
    • 2 Posts
    • 0 Thanks
    bea.watts1
    • #9
    • 16th Jun 19, 9:15 AM
    • #9
    • 16th Jun 19, 9:15 AM
    That's a really clear explanation! Thanks for your help!
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,068Posts Today

7,631Users online

Martin's Twitter