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Question on tax

nono2522 Avatar
6y, 10m agoPosted 6 years, 10 months ago
Just read something in the news about tax codes being wrong etc, so decided to look at mine. Accordint to what i read if its 647L then you only pay tax once you've earned £6470. Ive earned just over 7k this year (only a part timer!) Does this mean I shouldnt have paid any tax at all until i hit £6470? i really dont understand this!

Any help would be greatly appriciated
nono2522 Avatar
6y, 10m agoPosted 6 years, 10 months ago
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#1
Yes, the first £6470 is tax free, then you pay tax on the rest. Chances are you'll automatically get a rebate this/next April, as the tax is taken assuming an income in advance.
#2
You pay tax based on your yearly expected income so if you have only just earned £7k you will be estimated to be going to earn £8400 by end of tax year, your tax bill will be based on the approx £2k above the £6740. The tax office take a proportion of this every time you are paid rather than waiting till you hit your tax allowance. Means that you pay a little each week rather than alot when you are over the tax allowance.
#4
Humm. I'm usually good with maths, but I've just checked my pay slips.

Say I've earned £10K to date this year, my tax code is 653L, but I've paid £20 shy of £1K in tax (not including NI contributions). This isn't correct, surely?
#5
nickw90
Humm. I'm usually good with maths, but I've just checked my pay slips.

Say I've earned £10K to date this year, my tax code is 653L, but I've paid £20 shy of £1K in tax (not including NI contributions). This isn't correct, surely?


Your allowance is £6530 which when divided by 52 comes to £125, So you dont pay tax on the first £125 of your wage weekly but you pay tax on the rest,
#6
nickw90
Humm. I'm usually good with maths, but I've just checked my pay slips.

Say I've earned £10K to date this year, my tax code is 653L, but I've paid £20 shy of £1K in tax (not including NI contributions). This isn't correct, surely?


That is almost correct.

We are 9 months through the tax year so your estimated gross wage when the tax year ends will be £13,333.

Therfore your taxable income is £6,794 (i.e. £13,333 minus £6,539) so the tax at %20 is £1359. The nine month share of £1359 is £1019.

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