Question For those in the know about TAX!

[pringlejon]

Today I've finally got myself a grad job offer after 6 months of seeking work. I've not earned a penny since December 31st 2010, so will I be exempt from some income tax up until I hit the £7475 mark or will I get the opportunity to claim this back come April next year?

 

[Holy Joe]

congrats on your job. If you are on PAYE your tax free allowance should be spread over the year - so you'll start paying tax straight away - shouldn't need to reclaim anything back.

 

[Its Only A Game]

The 7475 is effectively split in 12 monthly portions.

Assuming your first pay packet is at the end of July, you could have earnt £2491.67 before any tax is due.(4 months worth for apr/may/jun/jul)
By the end of august it rises to 3114.58 and so on increasing by about £623 per month.

Once your gross wage to date exceeds the tax free amount you will pay tax on the difference

 

[DTS]

Congrats on the job. I agree with the above two bits of info.

 

[Yorkshire Blue]

I think you'll need to provide a P45 from your previous job (or from the benefits office if you were claiming dole). If you don't have a tax code you'll end up paying 40% emergency tax rate.

Also, try and work out how much tax will be deducted from your salary next tax year and put the difference between that and what you'll be paying in tax this year into a separate savings account as soon as you're paid. This should be in addition to any money you plan to put aside for savings.

I've started/returned to work midway through a tax year a couple of times now and when you hit the next tax year it's like a paycut as your tax free allowance is split over 12 months rather than 6 (or however many months you worked that particular year).

 

[Holy Joe]

The 7475 is effectively split in 12 monthly portions.

Assuming your first pay packet is at the end of July, you could have earnt £2491.67 before any tax is due.(4 months worth for apr/may/jun/jul)
By the end of august it rises to 3114.58 and so on increasing by about £623 per month.

Once your gross wage to date exceeds the tax free amount you will pay tax on the difference

Is that right? Or will the tax free allowance be split over the remaining months in the tax year e.g., say start work in Oct (halfway through tax year) insteada of receiving 1/12 of the allowance each month you'll get 1/6.

 

[Neil_F]

The answer depends on what tax code you're on. Check your payslips in the first month.

If it says 747L M1 then this means that the personal allowance is divided by twelve and allocated on a monthly basis, regardless of what has happened in prior months.

A 747L cumulative code will allocate the personal allowance on a year-to-date basis. In other words, if you have had no income for the first 3 months, then your tax in July will be calculated using a personal allowance of 2,492 [7,475*4/12]. A cumulative code will mean you pay the right tax on employment income in the whole year.

If you have a M1 code on your first payslip phone up HMRC and ask them to change it to a cumulative.

 

[pringlejon]

Cheers for the answers. Possibly being offered another job at another company now. After searching for work for 7 month, 2 come along at once. I have a p45 from my last job in jan and have not been on dole (rather stupidly in hindsight). Am I right in saying ni is calculated on a weekly or monthly basis so will not manage to avoid paying this!