Tax - TSR guide and questions thread

Hi, I'll be starting a temp job on the 6th of April; as a Census Collector. The last (and only) experience I've had with the tax system is when I interned for McKinsey & Company when I was 17. As far as I remember I only had NI deducted from my earnings.

I have one question on the personal allowance. Does HMRC only begin taxing you (Income Tax) once you've reached (and surpassed) your personal allowance?

The usual position is that your personal allowance is effectively spread across the tax year (6 April to 5 April), so if you're earning at a rate that would exceed £7,475 for the year then you may have Income Tax deducted under PAYE. If you leave the job before the end of the tax year and don't expect to work again in the year, you can reclaim any overpaid Income Tax by completing a form P50 and sending it to your tax office along with Parts 2 and 3 of your form P45: http://www.hmrc.gov.uk/pdfs/p50.pdf

Thanks for your help.

The job will be for 1 month only. Although I'm waiting to see if I've got another job with the census that starts straight after the Census Collector role. This role would last another month on a part-time basis. For Census Collector I would be earning £370 a week. I'm going back to uni in October so I doubt by 05/04/12 I would have earned more than the personal allowance. Would I still have income tax deducted?

Under normal circumstances, yes, I'd expect you to have Income Tax deducted given that you're starting the job at the start of the tax year. However, it's worth pointing out that if you're in full time education and working only in holiday periods then you can complete a form P38(S) to be paid without Income Tax deduction.

I'd also expect you to have National Insurance Contributions deducted on those earnings, at a rate of 12% on earnings in excess of £139 per month - and NICs can't be reclaimed based on a low annual income as they're calculated for each pay period in isolation.

Hi there,

You seem a rather knowledgeable fellow on tax so maybe you could help shed some light on the below:

The company I am going to work for offers a £7,000 interest free loan when I join which is paid back over 4 years. Any idea what the taxable benefits are and how much I would save in tax?!

Also if I take the season ticket loan (circa £4,000) would there be any tax benefits there?

Many Thanks

Cable

If you took the full £7,200 loan, that would be treated as a beneficial loan and you'd be taxed on the benefit. However, a loan of less than £5,000 is exempt from this treatment - no taxable beneift would arise where the total of all loans that you receive from your employer is below this. It's quite common is for people to take a loan of this maximum exempt value. Where there is a benefit, it would be calculated by applying the "official rate of interest" (4.0% for 2010/11) to the loan balance.

Depending on the exact arrangements for the season ticket loan, that might also contribute to the £5,000 threshold at which a taxable benefit arises.

Loads of detail here, if you're interested: http://www.hmrc.gov.uk/manuals/eimanual/eim26100.htm

Thanks,

So am I right in thinking the resulting tax benefit would be pretty negligible.. £7,200 * 0.04 = £288 * 0.2 basic rate = £57.60 for the year?

I read the Wiki but am still a bit confused. It's the first time I have to deal with British taxes.

I had a summer job last year and things went wrong with my pay and I only just got it this February. They did deduct taxes, both National Insurance and Income Tax. Which of these can I claim back? Do I have to do it before April?
I am not really sure how to go about it. Any help would be appreciated

Hi guys,

I'm having some difficulty over understanding whether I have been unnecessarily taxed during a job I worked last summer.

I'm not sure how the system works and whether I should have been taxed or not, so i'll give you some information on my situation and if anyone could clear up the situation for me by letting me know if I should have been taxed or whether I am entitled to get my taxed money back that would be fantastic.

Last summer I was 19 years old and worked 5 days a week, 36 hours a week for 6 weeks at a retail store. I was also a university student at this time (and still am), and as a result of this i thought i would not be taxed on my earnings, but i was.

Should I have been taxed? and if not how would i go about getting my money back?

(thanks for any help because i really am quite clueless on this)

We need a sticky in here saying being a student doesn't exempt you from paying tax.

We need a sticky in here saying being a student doesn't exempt you from paying tax.

Like all of us, you are not liable to tax on the first £6475 of income this year. But when you take a job, your employer may not know that you have no other income, and so may deduct tax on an 'emergency' code. When you leave, you should get a P45. If you are still on their books you will get a P60 at the end of the tax year. Either acts as a receipt for your tax paid. Contact your tax office and ask about a refund. They may ask you to complete a tax return for the year - to certify that you have no other income. Student finane doesn't count as taxable.

If your total income for the year doesn't exceed your personal allowance (£6,475 for most UK residents for the tax year ending on 5 April 2011) then I wouldn't expect you to have an Income Tax liability for the year and you should be able to reclaim any Income Tax that you've paid. At this stage, I'd suggest waiting for the end of the tax year (just over a week away), then writing to your tax office enclosing evidence of your income and tax paid and requesting a refund. You could try calling them in the first instance, though, as they *may* have the information that they need to process a refund already. Based on the wording of your post, I'll highlight here that you may not receive the personal allowance if you're not UK tax resident.

You can't reclaim any NICs that you've paid in the same way, though, as they're generally calculated for each pay period rather than with reference to an annual threshold.

Hey, thank you for getting back to me. I am definitely not over the income threshold (I wish). What do you mean I might not get the personal allowance though?
What sort of evidence do you think I need? Pay checks from my jobs etc? Sorry if it's a lot of questions, I am just not familiar with the system at all.

Thank you