I'm working in a warehouse in a picker position. I've been working for a year now, and my question is this: I've been paying income tax since the first day, and I worked before that for a few days with agencies as well. I paid taxes. I know until you reach £10600 you don't pay income tax. Some colleagues of mine say they didn't pay any tax for the first 3-4 months,only a few pounds for NI, and they were new employees. Should I call HMRC for answers? I talked with somebody, and he said it is an HMRC problem and not the company's fault.
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Welcome to Personal Finance & Money. What country are you in? What is "H&M"?– dg99Commented Apr 5, 2016 at 21:10
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England Sir, H&M Revenue is goverment institution for paying taxes and health– BogdanCommented Apr 5, 2016 at 21:14
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Do you mean HMRC ? you normaly don't pay any income tax for the first few months until you hit the limit– PeponeCommented Apr 5, 2016 at 21:14
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@Pepone yes HMRC . So how is supposed to be ? I`m paying since from the first day of work and is happened only for me !– BogdanCommented Apr 5, 2016 at 21:19
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Maybe you never gave them the form that says you didn't have income in that year before?– AganjuCommented Apr 6, 2016 at 2:11
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1 Answer
Although you don't pay tax on the first £10,600 of income in a tax year (the "personal allowance"), this is spread out through the year. So typically if you earn say £1,500 in a month, you would get £10,600/12 = just under £900 tax-free, and pay tax on the remaining £600. The intention is to make sure you pay tax smoothly throughout the year.
Because the personal allowance is actually yearly rather than monthly, this does mean that if you start work in the middle of a tax year having previously not had a job, you will have some unused personal allowance from the previous months which you can use immediately.
If you told your employer that you didn't have any previous income for the tax year, then they should give you the benefit of that unused allowance immediately so you might get more income tax free for some months. The form they should have asked you to fill in is linked here (it was previously called a "P46" but apparently this has been abolished now): https://www.gov.uk/government/publications/paye-starter-checklist
For example if you started 3 months into the tax year, then you have a quarter of the allowance unused - £2,650. So with a gross monthly income of £1,500, you would get about 4 months pay tax-free until the excess allowance ran out (each month you get about £900 tax-free anyway, and the excess allowance gets used up at about £600/month).
Tax years run from April 6th to April 5th the next year, and if you are paid monthly then typically all your April pay ends up in the new tax year as you get it at the end of April.
So if you started work soon after the the start of the tax year - e.g. in early April - then you'll find that you don't get any benefit from this effect and you'll start paying full tax immediately. Conversely, someone who started work in January earning £1,500 a month wouldn't pay any tax at all until the new tax year in April.
(The personal allowance was £10,600 from April 2015 to April 2016, and is now £11,000 from April 2016 to April 2017.)
answered Apr 6, 2016 at 5:14
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So then the problem is because my start date is 30.03.2015 I
m paying immediately pax ? Im earning some where £1300 pm and Im paying taxes £200+. Is too strange for me this thing . Im waiting now P60– BogdanCommented Apr 6, 2016 at 7:17 -
1If your gross pay (before any tax) is £1300pm, then you should have been paying about £80 income tax per month last tax year, as well as £75 "national insurance", which is effectively another tax, but listed separately. If you were paying £200 just on income tax that sounds like too much. Commented Apr 6, 2016 at 7:43
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Yes it is . I
m paying £40 +- per week for NI and Income Tax. I talked today with my boss because tomorrow will be my last day on this job and he said they doing this automaticly and another guy have the same problem like me . Im waiting now to find out an answer for my doubt– BogdanCommented Apr 6, 2016 at 20:12 -
£40 per week for NI and income tax combined sounds about right. Commented Apr 6, 2016 at 22:51
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Whatever you paid, as soon as you get your P60 for the year, you can fill out your tax return, and HMRC will calculate the exact amount that you should have paid in the last year, the P60 contains the exact amount that you did pay, and HMRC will refund the difference or ask you for more money if you paid too little. Commented Apr 7, 2016 at 14:55