Tax deductions

Discussion in 'Bulletin Board ARCHIVE' started by Guest, Aug 6, 2005.

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  1. Gue

    Guest Guest

    How much tax do you get deducted from working? Is there a fixed rate?

    Thanks.
     
    Guest, Aug 6, 2005
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  2. Caz

    Cazi New Member

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    A completely different planet to everybody else
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    Depends on what your tax code is.
     
    Cazi, Aug 6, 2005
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  3. Gue

    Guest Guest

    go on then, explain.

    What means what? I was told until you earn £5,000 you don't get taxed...but I've been taxed before!
     
    Guest, Aug 6, 2005
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  4. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    Not fixed no

    But it depends on how much you earn in a year

    Last years allowances were

    the first £4745 is not taxed
    the next £2020 are taxed at 10%
    and the next £27360 at 22%

    Above that its 40%

    Thats not all though - you also have to pay national insurance
    This is 11% on earnings over £94 per week until you earn over £630 per week when its sort of capped though there is still an extra 1% tp pay

    Welcome to the world of Taxation

    Dont forget that you also pay 17.5% VAT on most things also additional duty on many things as well
     
    Farnham_Red, Aug 6, 2005
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  5. Gue

    Guest Guest

    RE: Not fixed no

    So, let's say I earn £500...how much will I see of that?! Or does it depend on my circumstances? Surely they can't take too much off me?
     
    Guest, Aug 6, 2005
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  6. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    Thats sort of true

    But you still pay national insurance
    Also if you are earning regular income you will pay tax each time you are paid if your annual earnings are expected to exceed the tax free allowance
    eg if you are earning 12K per year you dont get 5 tax free months before you pay any tax, but pay the same amount of tax each month
     
    Farnham_Red, Aug 6, 2005
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  7. Gue

    Guest Guest

    In its simplest form and assuming that you only have the one 'paid' employment with no other 'taxable' income, then your basic peronal allowance to offset against tax, in the current tax year, is £4895 i.e you can earn up to £4895 before paying income tax. Any earned income in excess of the basic allowance is taxed at 10% for the first £2090 pounds, then at 22% for income between £2091 and £32400. Anything earned over £32400 is taxed at 40%.

    So, if you earn £10,000 and have the basic allowance, you would pay tax on £5105 of income. £2091 at 10% (= £209 tax) and £3014 at 22% (= £663 tax) giving a total annual tax charge of £872 or approximately £73 per month.
     
    Guest, Aug 6, 2005
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  8. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    500 over what time period

    and when did you start earning?

    if you took a job paying 500 per month thats 6000 per year
    so total tax will be
    6000 - 4745 = 1255 this is only taxed at 10% so you will pay £125 in income tax over the year - or about £10 per pay packet

    But there is also national insurance
     
    Farnham_Red, Aug 6, 2005
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  9. Gue

    Guest Guest

    Its also worth remembering that

    if you don't have a P45 to give your 'new' employer, or you have another paid job, then your employer may well be instructed to operate a BR tax code. This means you don't get any allowance at all and pay 22% on all your income - if that's the case get on to your tax office straight away to sort out a personal code.
     
    Guest, Aug 6, 2005
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  10. Gue

    Guest Guest

    RE: 500 over what time period

    £500 over 10 days.

    This obviously isn't my first job, but I haven't earned anywhere near £5,000 in my lifetime yet. Also the job is a temp job, so I won't be getting an annual wage.

    I know about NI deduction.
     
    Guest, Aug 6, 2005
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  11. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    National insurance

    £500 per month = 115 per week
    ao NI is 11% of 115-94 or 11% of 21 so a further £10 per week,

    ie you will lose about £50 per month in Tax and NI from your pay slip
     
    Farnham_Red, Aug 6, 2005
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  12. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    In that case make sure you keep a record

    Then at the end of the year (April) make sure you fill in a tax return and claim back the overpaid tax.

    Also make sure you get a proper tax code defined, you may be being taxed on the "emergency rate" if you dont present a P45 each time you start work
     
    Farnham_Red, Aug 6, 2005
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  13. Gue

    Guest Guest

    RE: In that case make sure you keep a record

    I'll have to see about getting it sorted.

    Easier way is to ask for cash in hand!
     
    Guest, Aug 6, 2005
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  14. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    Hmmm
     
    Farnham_Red, Aug 6, 2005
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  15. Gue

    Guest Guest

    Hmmm?
     
    Guest, Aug 6, 2005
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  16. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    Well cash in hand

    is potentially illegal especially if your employer isnt paying employers NI on your behalf and providing a proper record of payments. ANd could mean you are working without adequate insurance etc etc etc.


    (NOOO)
     
    Farnham_Red, Aug 6, 2005
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  17. Gue

    Guest Guest

    RE: Well cash in hand

    But I get my full wages and we're all happy!

    I never knew it was illegal, news to me.I'll have to find out.
     
    Guest, Aug 6, 2005
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  18. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

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    I said potentially illegal

    Just be careful. If you earn less than the 5K and can prove it you should be fine, but you might not have any comeback if something goes wrong. Should be fine if you have a contract though
     
    Farnham_Red, Aug 6, 2005
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  19. Gue

    Guest Guest

    RE: I said potentially illegal

    erm...no contract, or anything as far as I know.

    I'll have to look into it, but for now I'm off. Thanks for the help, I owe you one.
     
    Guest, Aug 6, 2005
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  20. JLWBigLil

    JLWBigLil Well-Known Member

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    Take it from me little one

    Farnham has given you sound advice . I have a first class honours degree in Payroll and Pension Management and I couldn't have put it better . You are legally obliged to pay the appropriate amount of Income Tax and National Insurance , the responsibility is not only your employers . If you were to be paid "cash in hand" , both parties are breeching the laws governing employment .
    Trust me John .
     
    JLWBigLil, Aug 6, 2005
    #20
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