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Can someone explain tax allowance?

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From my understanding does it mean the amount you earn in a tax year, you do not need to pay tax on. So if I earned less then the personal allowance in that tax year, does that mean I don't need to pa… Read More
551625 Avatar
6m, 4w agoPosted 6 months, 4 weeks ago
From my understanding does it mean the amount you earn in a tax year, you do not need to pay tax on. So if I earned less then the personal allowance in that tax year, does that mean I don't need to pay income tax?

Thanks.
551625 Avatar
6m, 4w agoPosted 6 months, 4 weeks ago
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#1
Yes its the amount you earn in a tax year, anything less than 10k and you shouldn't get tax, or should get a rebate.
#2
If you earn less than your tax allowance it won't be taxed.
#3
master10
Yes its the amount you earn in a tax year, anything less than 10k and you shouldn't get tax, or should get a rebate.

Its £11000 now but this.
#4
It's not just earnings it is any income you receive like Interest on savings not in an ISA, rental income etc.
Bear in mind that if you make any pension contributions this is tax free so if you are over the limit you could put it in a pension scheme and pay no tax (if you can afford it).

Also, you may be liable to National Insurance contributions so you may not end up getting all your earned income.
#5
As above, if you earn over your tax free amount you're only taxed on the portion of funds over that amount, not the entire amount.

Whilst it's not in your question also take into consideration national insurance.
#6
sydney871
It's not just earnings it is any income you receive like Interest on savings not in an ISA, rental income etc.
Bear in mind that if you make any pension contributions this is tax free so if you are over the limit you could put it in a pension scheme and pay no tax (if you can afford it).
Also, you may be liable to National Insurance contributions so you may not end up getting all your earned income.

I'm pretty sure if they are asking about how much tax they need to pay they won't be going over the savings tax threshold! :)
#7
GAVINLEWISHUKD
sydney871
It's not just earnings it is any income you receive like Interest on savings not in an ISA, rental income etc.
Bear in mind that if you make any pension contributions this is tax free so if you are over the limit you could put it in a pension scheme and pay no tax (if you can afford it).
Also, you may be liable to National Insurance contributions so you may not end up getting all your earned income.

I'm pretty sure if they are asking about how much tax they need to pay they won't be going over the savings tax threshold! :)


True but in case they are just below the threshold they need to be aware of including any interest they have earned or come to think of it any benefits they get may have to be taken into account.

Just covering all bases.
banned#8
No. oO
#9
I thought my employer paid my tax as I'm on PAYE?
#10
sydney871
GAVINLEWISHUKD
sydney871
It's not just earnings it is any income you receive like Interest on savings not in an ISA, rental income etc.
Bear in mind that if you make any pension contributions this is tax free so if you are over the limit you could put it in a pension scheme and pay no tax (if you can afford it).
Also, you may be liable to National Insurance contributions so you may not end up getting all your earned income.
I'm pretty sure if they are asking about how much tax they need to pay they won't be going over the savings tax threshold! :)
True but in case they are just below the threshold they need to be aware of including any interest they have earned or come to think of it any benefits they get may have to be taken into account.
Just covering all bases.

Personal saving allowance is £1000. That's a serious amount of savings to earn that much interest. It's so much for most people it's not an issue.
#11
As others have said. You should not pay any income tax on any income up to the limit in the tax year. However, sometimes the Tax Office make mistakes (or perhaps your employer gives them the wrong tax code). If you pay too much tax, you need to let the TO know and they can rectify it and give a refund for any overpayment.
#12
ether707
I thought my employer paid my tax as I'm on PAYE?

They do. You tax code on your payslip should show 1100L if it is your only job. If it does not then contact the tax office to change it and any tax owed will be refunded.
#13
You can use the mse site link to calculate your income tax. http://www.moneysavingexpert.com/tax-calculator/
#14
if you earn less than your allowance, which is just over 10k, then you won't pay any income tax. you will pay national insurance above 8k of earnings.

you may have to claim the money back from HMRC as your employer may tax you like everyone else.
#15
mutley1
if you earn less than your allowance, which is just over 10k, then you won't pay any income tax. you will pay national insurance above 8k of earnings.
you may have to claim the money back from HMRC as your employer may tax you like everyone else.


It's 11k
#16
cdm22
ether707
I thought my employer paid my tax as I'm on PAYE?
They do. You tax code on your payslip should show 1100L if it is your only job. If it does not then contact the tax office to change it and any tax owed will be refunded.

This is for the tax year 2015-2016 and the tax code is 1060L. I did earn more than the tax allowance amount but my tax hasn't been paid by my employer. On my last pay slip for that tax year I paid national insurance but PAYE Tax is at 0.00.
#17
ether707
cdm22
ether707
I thought my employer paid my tax as I'm on PAYE?
They do. You tax code on your payslip should show 1100L if it is your only job. If it does not then contact the tax office to change it and any tax owed will be refunded.
This is for the tax year 2015-2016 and the tax code is 1060L. I did earn more than the tax allowance amount but my tax hasn't been paid by my employer. On my last pay slip for that tax year I paid national insurance but PAYE Tax is at 0.00.

then sounds like you owe the tax man some money.
#18
For tax year 15/16 did you earn more than £10600
#19
nickster76
For tax year 15/16 did you earn more than £10600

isn't that what she said?
#20
Also what does your P60 say for year 15/16
#21
mutley1
nickster76
For tax year 15/16 did you earn more than £10600

isn't that what she said?


Yes I have just read that further up! Mutley you need to chill out. I'm trying to help with something that I know a lot about!
#22
unless you paid some of your earnings to a pension plan so that your taxable pay is less than your personal allowance, you will owe tax to the inland revenue.
#23
mutley1
unless you paid some of your earnings to a pension plan so that your taxable pay is less than your personal allowance, you will owe tax to the inland revenue.


It doesn't solve the problem of zero tax paid TD on the pay slip though.
#24
nickster76
mutley1
nickster76
For tax year 15/16 did you earn more than £10600
isn't that what she said?
Yes I have just read that further up! Mutley you need to chill out. I'm trying to help with something that I know a lot about!

i think the question here is not whether the op shouldn't pay tax but whether she should. she earned more than the personal allowance, which she had already said so in the above post and wonders why her employer has not passed the tax on to the inland revenue by taxing her as she has earned more than the personal allowance.
#25
nickster76
mutley1
unless you paid some of your earnings to a pension plan so that your taxable pay is less than your personal allowance, you will owe tax to the inland revenue.

It doesn't solve the problem of zero tax paid TD on the pay slip though.

any earnings paid to a pension plan will come off your earnings, reducing your taxable earnings so if she earned more than the personal allowance but the pension contributions deductions bring that earnings below the allowance then no further tax will be payable.
#26
So the OP needs to address the problem with hwr employer then.
#27
nickster76
So the OP needs to address the problem with hwr employer then.

i guess the op believes that her employer has made a mistake but doesn't want to shoot herself in the foot. she would like to hear the answer 'don't worry. your employer is responsible for your tax payments and if they make a mistake then it is not your problem'.

unfortunately this is not the case and everyone is responsible for their own tax payments, all be it, they may be able to claim ignorance and possibly get away with it when it comes to PAYE if the tax man spots it.
#28
She stills needs to address the problem with her employer so payroll can be corrected. HMRC will advise the same thing.
#29
nickster76
She stills needs to address the problem with her employer so payroll can be corrected. HMRC will advise the same thing.

that would be the right thing to do but how many people will do that? :)
#30
HMRC will eventually cotton on once they have reconciled their figures. Put it this way, I've just finished correcting an employees Tax/NI from 2012/2013
#31
nickster76
HMRC will eventually cotton on once they have reconciled their figures. Put it this way, I've just finished correcting an employees Tax/NI from 2012/2013

i can well believe that. the tax man will always catch up with you. they got 6 years to do it. :)
banned#32
ether707
I thought my employer paid my tax as I'm on PAYE?
HTF would I know what you thought? oO

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