Income tax Q

[tinkerbell23]

This seriously boggles my mind.

Keep it dumbed down please....

Because i have been claiming JSA since feb untill aug....

And therefore have had no taxable income...

Will my wages in sept/oct/nov/dec NOT be taxed because i can earn upto a certain amount a year before tax? X

[factor-fiction]

JSA is taxable isn't it? It's not taxed at source but certainly CB JSA is taken into account in your tax code when they get your P60. Maybe it's different for IB JSA though- I'd have to check

[tinkerbell23]

Och im confused already.

This seriously all goes over my head.

X

[factor-fiction]

But the answer is no- the tax deducted will normally be based on a calculation which takes account of earnings to date and expected future earnings in the tax year. the tax deducted will be fairly small a s a proportion of your income. NI and maybe pension will be deducted. You may also find you have to pay student loan repayment deductions too

[sunny-dave]

JSA is taxable - just that the amount is so low that it will be inside your tax free allowance.

You will still get some of your first pay packet(s) free of tax - depends on how much you earn and how much JSA you have received in this tax year.

It is vital that you get a proper tax code to your payroll department - otherwise they will tax you on BR which means that they take 20% of everything.

[factor-fiction]

All JSA is taxable.
http://www.hmrc.gov.u...imanual/eim76222.htm.
I estimate you received approx £1500 JSA between April and August. This hasn't had tax deducted at source, but it will be taxable alter in effect. If you can tell me your approx gross pay I'll work out the likely tax deduction.

[tinkerbell23]

I dont have a student loan ....

They have got my p45 from job centre so confident of correct tax code!!

Do you know im not even fully sure of my hrly rate lol £12 or something!!

Xx

[factor-fiction]

The problem she may face, sunny-dave, is she may have to wait a while to get the p45 (not P60 as said in error earlier) from the DWP, so she may start on BR code for the first month or two

[factor-fiction]

Sorry - crossed posts. If they have your p45 then your tax should be deducted correctly.
Assuming you'll earn around £13000 between September and end of March 2013 your total earnings for the year will be around £14500. The first £8105 is tax free. that means tax is due on approx £6400. At 20% this equates to £1280.
Spread over 7 months that's around £182 a month

[tinkerbell23]

Thanks factor ill get back with the details when im paid!!

Just wondering really! Thanks all xx

[sunny-dave]

May get taxed on 'month 1' rather than cumulative though factor - with a settlement refund at the end of the tax year?

[tinkerbell23]

Month one will b under £200 no joke x

[tinkerbell23]

Thanks so much x

[Buenchico]

To fill in a bit of detail on what's already been written (and using weekly pay, rather than monthly, for my example):

You're allowed to earn £8105 without paying tax in the current tax year. That's roughly £156 per week.

So, at the end of the first week of the tax year the tax man deducts £156 from your earnings (or other relevant income) and takes 20% of what's left.

At the end of the second week he takes £312 (i.e two lots of £156) from your TOTAL earnings across the TWO weeks and calculates 20% of what's left. That's the TOTAL amount of tax which you should have paid, so he knocks off what you'd paid in the first week and charges you the rest.

At the end of the third week he takes £468 (i.e. three lots of £156) from your TOTAL earnings across the THREE weeks and calculates 20% of what's left. That's the TOTAL amount of tax which you should have paid up until the end of Week 3, so knocks of what you'd paid up by the end of Week 2 and charges you the rest.

That process continues week by week. So your first pay statement will be about 22 weeks into the year. The tax man will then look at your TOTAL income (from both JSA and your new employment) up until then and knock off 22 lots of £156 (= £3432) to work out the TOTAL amount of TAXABLE income you've accrued over the year. Unless you've just landed a really fantastic job (paying thousands of pounds per week) the figure he gets will be negative, so you won't have to pay any tax on your first pay packet.

As time goes by your TOTAL pay for the tax year to date will gradually catch up with your tax free allowance (in multiples of £156) at that point, so you'll start paying tax. However if you're earning less than about £218 per week you won't actually reach the threshold within the current tax year (which ends on 5th April). Even with pay of £300 per week it would be around 3 months before your total pay would catch up with your allowance.

Chris