I've started my first job on the 18th of August and got my first pay slip today (September+ part of August). I've noticed that the salary was tax free. I wonder if that's a mistake and there will be extra taxes taken in the future, or if I need to contact someone about that? For reference, my salary will be 26k per year during the first 3 months (probation period) and 27k after that. Can anyone help me understand a little more about how it works? Thank you so much!
Your employer won't start deducting tax until you have been paid enough money that you will owe tax.
British PAYE taxes are designed to deduct exactly the right amount of tax for the amount you have earned so far. The reasoning is that if you were to stop working immediately after a salary payment then exactly the right amount of tax will have been deducted and you won't need to file a tax return. The tax-free allowance for 2022/23 is £12,570, so until you have earned that you won't have any tax deducted.
It's possible that you will owe no taxes for this year.
You are only going to be making slightly more than that during the six months remaining in the tax year. My estimate of how much tax you will pay this year is around thirty pounds, all of which will be deducted in your last payslip of the tax year (end of March 2023). If your employer is making other deductions then you may end up being paid less than that, and your tax paid would then be zero. If so then enjoy - it won't happen again in future tax years. Your tax code will tell you how much deduction you are due. It should be printed on your payslip. See JayFor's answer for more details, or the other answer linked in the question comments.
You say in comments that you are paying National Insurance. That eliminates the possibility that your employer is filing to deduct taxes that they should.
As a supplement to DJClayworth's answer, I wanted to suggest checking your tax code. This should be printed on your payslip and is usually made up of four numbers and 1-3 letters.
There is a full guide to tax codes on HMRC's website, but basically:
- The number represents your total tax-free personal allowance for the year. For standard taxpayers in England for the 2022-23 financial year this will be 1257 (i.e. £12570).
- The letter refers to how your personal allowance is calculated. For standard taxpayers in England this will be L.
So if your tax code is 1257L, and you're not aware of any reason why you should be on a different tax rate, you don't have to do anything. Your employer will start taking deductions as and when they need to.
There are a number of reasons why you might have a different tax code (including if you live in Scotland or Wales), so don't panic if yours is different. Check the HRMC guide to tax codes and see if you can work out how it has been calculated.
If you think there is a mistake in how your tax has been calculated, HMRC also has an online form which you can use to work out your tax allowance and request changes:
In some of my jobs here in the UK, the employer did the math for me in the following way:
They calculated how much tax I should pay, per month, if I am employed 12 months. As I started not in the beginning of the tax year, they calculated how much extra tax (to return in the end of the fiscal year) I would have paid like this. They then deducted that from the first salaries until I "catched up". So maybe in month 3 of employment, I start paying normal taxes. Ends up the fiscal year with zero movement required from me or the HRMC.
Most universities in the UK seem to work like this, for example.