Tax

[ScousePostie]

Hi,

I started working for Royal Mail in December 2014, I paid tax on my first weeks earnings, but this was reimbursed the following week. I've paid £0 tax up to the first week in April 2015 when I was taxed on my earnings. As far as I understand, tax shouldn't be paid on the first £10,600 of earnings (personal allowance).

I was sent a letter just before the beginning of the tax year stating that my tax code was changing for the following year. So far, I've paid tax every week since the start of the financial year.

Has anyone else suddenly started paying tax at the beginning of this financial year? If not, who should I get in touch with to discuss this? I've spoken to my manager who said to wait a few weeks and see if its reimbursed or not.

Many thanks.

[NewPostieUK]

Not paying tax on the first 10K doesn't mean you don't pay tax until you've actually earned that in the tax year. It's spread over the year. Everybody pays tax every week. At the end of the year, if you've earned 20k, you'll have paid tax on half of it.

[ScousePostie]

Right, I see. I was always under the impression that it meant you had to earn £10,000 before being taxed on anything over that amount afterwards.

[IloveMYredTROLLEY!]

In very crude terms, you now typically start paying Income Tax once your gross pay is ~£200 per week.

[IcanthelpthewayIam]

Right, I see. I was always under the impression that it meant you had to earn £10,000 before being taxed on anything over that amount afterwards.

If you stopped working when you had earned the 10k you would get the tax back, it's called Pay As You Earn saves you earning then getting whacked for tax when you get over the threshold, think would you rather spread a tax bill of roughly 1500 over 52 weeks or over 26 weeks after you cross the threshold

[rogersh]

Hi,

I started working for Royal Mail in December 2014, I paid tax on my first weeks earnings, but this was reimbursed the following week. I've paid £0 tax up to the first week in April 2015 when I was taxed on my earnings. As far as I understand, tax shouldn't be paid on the first £10,600 of earnings (personal allowance).

I was sent a letter just before the beginning of the tax year stating that my tax code was changing for the following year. So far, I've paid tax every week since the start of the financial year.

Has anyone else suddenly started paying tax at the beginning of this financial year? If not, who should I get in touch with to discuss this? I've spoken to my manager who said to wait a few weeks and see if its reimbursed or not.

Many thanks.

The allowance is increased to £10,720 as £120 is uniform tax relief - hence Tax code 1072L/0 (single person)
You then divide by 52 to give "free pay" £206.15 per week. Earnings over this are taxed at 20% up to assessable pay (which is gross pay less pension contributions)

[Rory]

what does the /0 mean at the end of the tax code?

[rogersh]

what does the /0 mean at the end of the tax code?

Good question. I have not got the answer. I have found only one other example on a payslip from another employer who used 489L/1. But on several other payslips from different employers it always ends the code with the letter.

[Rory]

Yeah I've looked online and can't find the answer either.

[dvbuk55]

Well you could ring HMRC and hang on the line for 28 minutes before somebody answered the phone as I did last week. The answer I got wasn't encouraging even though I retired in December. It made me wonder if it was worth paying for a pension