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My Significant Other is going to start a job on the first working day of October with An exemplary salary of (let's say) £2000 a month (before taxes). She's to be given a signing bonus of (let's say) £1000 (before taxes).

Are these going to be taxed accordingly, or would she first need to hit the £11.500 personal allowance before any of her income is taxed.

Judging by my own personal experience back in 2014 I started in September. Received tax free pay for the first 6 months. Then got an "after-probation" raise but also run out of allowance and, after raise started getting less than what I was earning during my first 6 months. After the new tax year began my wage normalised for the next 12 months.

So which one would it be, £3000 at the end of the month, or close to £2200 - £2300 ?

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Tax in the UK for employment income is withheld evenly through the tax year by the PAYE system, so the £11,500 annual allowance is spread out month by month rather than being all available at the beginning of the tax year.

However, starting in October, there will already have been 6 months of the tax year, I guess without any other income. So half of the allowance (£5750) is available immediately, with another 1/12th coming each month (about £960).

She should make sure to give her employer enough information so that they know how to tax her properly, i.e. that she hasn't had a previous job this tax year: https://www.gov.uk/new-employee/employee-information

On the figures you give, the total income for the first tax year to April 2018 will be about £13000. It will likely take till about February to "catch up" with the personal allowance. So I'd expect no tax to be paid for the first few months, then a small amount of tax to be withheld in February, more in March, and then from April 2018 she can expect to be taxed at the normal rate.

Note that national insurance (roughly 10% for earnings above £500ish per month) is charged weekly or monthly so will be payable at the full rate immediately.

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  • Yep no other income prior, thanks for the great answer.
    – Иво Недев
    May 12, 2017 at 19:02
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    Not quite true. Until she gives the employer the information you mention she will be taxed at 20% (Emergency Rate). From that point on, I would expect the £300ish (minus any paid at the Emergency rate) that she will owe in 2017-18 tax year to be spread over the 6 remaining months (£50 per month), not to be all paid in February and March.
    – Mark Perryman
    May 24, 2017 at 10:39
  • @MarkPerryman (sorry, only just noticed this). I was assuming that the employer would go through the checklist at the outset as there's nothing to suggest they won't. Re how the tax is spread out, my understanding of the calculation process is that for any month, "cumulative tax owed" is calculated by comparing "income so far" with "allowance/tax band so far", which would give the result I describe. How do you think it works to get the result you describe?
    – GS - Apologise to Monica ♦
    May 8, 2020 at 20:12
  • I believe that they typically calculate the effective rate of tax you will pay over the year assuming the remaining months are the same as the current one; and then take that rate from each pay packet.
    – Mark Perryman
    May 8, 2020 at 21:49
  • @MarkPerryman you can use the PAYE calculator here to verify how it works: payecalculator.hmrc.gov.uk/PAYE0.aspx - try entering a date in October 2020, a tax code of 1250L (for the normal personal allowance) and 0 gross pay and tax due to date (as well as "tax not deducted due to regulatory limit").
    – GS - Apologise to Monica ♦
    May 9, 2020 at 7:03

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