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I started a new job in October in the UK. My tax code is 1250L.

  1. I was deducted 9.68% in October and November

    • 0% on income.
    • 9.68% on NIN.
  2. 18.74% in December

    • 9.05% on income.
    • 9.7% on NIN.
  3. 24.13% in January
    • 14.44% on income
    • 9.7% on NIN

I did got my National Insurance Number somewhere between November and December.

When will this stop increasing? Is this normal?

My base salary hasn't increased and I have no benefits (although, I am not sure what these can be).

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    9.68 18.74 24.13 Compared to what ? How is your base salary ? Is it increasing ? Are there any benefits ? – DumbCoder Feb 12 '20 at 12:48
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    it will never stop! they will keep going until it's 99.97%! muhahahaha! no just kidding. I don't know how exactly they work it out month to month but I've attempted an answer below. – marktristan Feb 12 '20 at 14:10
  • Benefits would be taxable non-salary things from your employer. Website gives the example of company car. More mundanely, free meals would be taxable. Free charging points for your car used to be a taxable benefit but is now exempt... – richardb Feb 13 '20 at 7:54
  • Is this your first job? – illustro Feb 13 '20 at 10:25
  • @illustro in this country, yes – Revolucion for Monica Feb 13 '20 at 10:27
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That's good that you have a tax code, it means you've been set up for PAYE – 'Pay As You Earn' income tax, which should mean no tax owing (or overpaid) at the end of the tax year (5 April 2020).

Your tax code of 1250L indicates:

  1. the '1250' means your tax-free Personal Allowance for this employment is £12,500 – in other words, no Income Tax is payable on the first £12,500 you earn from this employment; and
  2. the 'L' means that this is the standard amount, not an individualised tax code, so it will be updated automatically if the Personal Allowance changes.

So far, so good.

What this means on a month-to-month basis is roughly as follows…

In your first paycheque, they do some projection based on the information in that paycheque to figure out what it looks like you are going to earn over the course of a year. Then they apply 20% income tax to what looks like the pro-rata amount over the £12,500 annual Personal Allowance.

Then, as you go on to the next month and the month after that, the projection for the year changes. So you are taxed accordingly.

You'll be paying the same rate of income tax, (in your case, the basic rate – 20%), but on a different proportion of your monthly earnings. By the end of the tax year you should have earned £12,500 tax-free and paid 20% on the amount above that.

The variability you’re seeing usually only happens when you start a new job in the middle of a tax year. When you are paid monthly starting in a new tax year (from 6 April onwards) the PAYE deductions are usually at a consistent level.


Incidentally, the variability in PAYE can also happen if/when you have a salary event such as a pay increase/decrease or a bonus, during the course of a year. Suppose your employer paid you a one-off additional £10k in one month – you may find that results in a much larger proportion of tax in that month, and may push you into a different rate bracket, if it raises your projected earnings for the year. But if the pay goes back to the 'regular' amount in following months, you'll get that back in stages as less tax is taken out to even it up again.

There are rarely anomalies with PAYE but if you find you've overpaid income tax at the end of the year, you can either claim a tax refund or wait for it to be sorted out by HMRC amending your tax code for the following year.

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  • It would be worth noting that Class 1 National Insurance deductions are based on weekly income (gov.uk/national-insurance/how-much-you-pay). If the querant is including NI as "tax", then variations in the deductions from month to month (depending on employment) – illustro Feb 13 '20 at 10:25
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Yes, this is normal.

There are two main types of tax you pay through PAYE, income tax and national insurance.

Income tax is notionally due on your income for the whole tax year, but in practice it is collected by splitting up your allowance and tax bands into pay periods (months in your case) and the billing on a "year to date" basis, i.e. by comparing what you have earned so-far with your allowance/bands for the pay periods so-far.

National insurance on the other hand is charged on a per pay period basis, so it should be the same on all your payslips, unless your income changes.

This means that when you first start working in the UK in the middle of a tax year, you will pay considerably less tax than normal while you use up the "saved-up" personal allowance from the part of the year where you were not working.

It's difficult to be sure without the full details of your salery, but I suspect in your first month you only paid NI and no income tax, in your second month you paid some income tax, but less than usual and you have now used-up the saved-up allowances are paying the regular amount of tax.

Unless your salary is high enough to make you a higher-rate taxpayer I suspect that your tax load has now stabilized and will only change if the tax rules change or if you get a pay rise.

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  • Thanks for your answer, I have added a few details on the breakdown of the taxed I'm paying – Revolucion for Monica Feb 13 '20 at 10:25
  • We'd need to see the actual numbers rather than just percentages to be sure, but this is very likely to be the explanation. If you put your full annual salary into any online tax calculator you should get a good idea of what the long-term deductions should be. – GS - Apologise to Monica Feb 13 '20 at 10:29

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