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Tax - TSR guide and questions thread

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    I'm rather sorry if this has been asked before but I really don't understand tax so I probably haven't understood if it has I've read the guide but I don't understand it either :o:

    AFAIK I don't pay tax ATM I'm not sure whether it's my age or not earning enough to pay tax. I get around £400 a month and when I turn 18 (which is a while off) it will remain in that region of £400 a month, sometimes a bit more and sometimes a bit less. When I reach 18 will I start paying various taxes and if so what? I'm so confused :sad:
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    (Original post by letsdothetimewarpagain)
    I'm rather sorry if this has been asked before but I really don't understand tax so I probably haven't understood if it has I've read the guide but I don't understand it either :o:

    AFAIK I don't pay tax ATM I'm not sure whether it's my age or not earning enough to pay tax. I get around £400 a month and when I turn 18 (which is a while off) it will remain in that region of £400 a month, sometimes a bit more and sometimes a bit less. When I reach 18 will I start paying various taxes and if so what? I'm so confused :sad:
    Age doesn't have any effect on whether you should be paying tax (at least not until you get to the highest age ranges, i.e. age 65+). You likely won't be paying tax at the moment as your annual income is below the threshold at which you have to start paying Income Tax. £400 per month works out as £4,800 per year, while the standard tax-free 'personal allowance' is currently £6,475 for most people.

    This limit applies with respect to a 'tax year', which runs from 6 April to 5 April each year, and you pay Income Tax at 20% on any excess over this allowance during the course of the year. As your earnings don't reach this threshold, you don't pay any Income Tax, and this won't change with age.

    There's also a second form of tax on income to consider, known as 'National Insurance' (often abbreviated as 'NICs', for National Insurance Contributions). This is worked out for each pay period, rather than annually, but again you're below the threshold at which this starts to be payable. NICs are payable by employees at a rate of 11% on earnings in excess of £476 from any given job.

    Essentially, the message is that you've got nothing to worry about!
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    (Original post by Illusionary)
    Age doesn't have any effect on whether you should be paying tax (at least not until you get to the highest age ranges, i.e. age 65+). You likely won't be paying tax at the moment as your annual income is below the threshold at which you have to start paying Income Tax. £400 per month works out as £4,800 per year, while the standard tax-free 'personal allowance' is currently £6,475 for most people.

    This limit applies with respect to a 'tax year', which runs from 6 April to 5 April each year, and you pay Income Tax at 20% on any excess over this allowance during the course of the year. As your earnings don't reach this threshold, you don't pay any Income Tax, and this won't change with age.

    There's also a second form of tax on income to consider, known as 'National Insurance' (often abbreviated as 'NICs', for National Insurance Contributions). This is worked out for each pay period, rather than annually, but again you're below the threshold at which this starts to be payable. NICs are payable by employees at a rate of 11% on earnings in excess of £476 from any given job.

    Essentially, the message is that you've got nothing to worry about!
    Ah right, that makes more sense than tax has ever done

    Thank you :love:

    (I saw someone reading a book on tax the other day, it was the size of a harry potter book :afraid:)
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    (Original post by letsdothetimewarpagain)
    (I saw someone reading a book on tax the other day, it was the size of a harry potter book :afraid:)
    That sounds like a small one then! :p:
    Tax legislation

    They're several thousand pages long on wafer thin paper - and get bigger every year... :unsure:
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    I'm hoping someone can help me here, because this whole 'tax' scene is rather laborious and I'm not getting anywhere with it.

    I used to work at Sainsbury's and from what I understand, I was being taxed correctly, I left at the end of ~April and with my notice, I was classed as an employee until May getting paid into June (owing holiday pay). I then took up employment at Orange where. I'm not sure what tax code I was on, but I believe I was being taxed 20%. :ninja:

    In December 2009, I returned to Sainsbury's for a month. In December, I had a letter from HMRC stating that my employer (J SAINSBURYS PLC) had informed them of changes to my circumstances and subsequently my tax code was being changed to reflected these change. I would now be on 204T with a tax-free allowance of £2042. £2042 is nothing. I spoke to HMRC at the time and was given some cods-wallop about how these notices were reflecting what the employer was sending through and that when I stop working at Sainsbury's, I would need to inform them of the changes. :confused:

    On the day my contracted ended with Sainsbury's, I spoke to HMRC again, and after making sense to the girl at the other end, she seemed confused and wasn't quite sure of what I was asking. She said that she would look into it. She never called me back, and I didn't hear from them. Frankly, I couldn't be bothered ring them again. Because I wasn't even sure myself what I was supposed to be asking them. I spoke to HR at work and was advised that they would look into it from their end. :o:

    Now, I have received my '2010-11 PAYE CODING NOTICE' which again states that I'm going to be on 204T with an allowance of £2042. It also says, 'we know you have another job..'. I don't. I have told them already! :mad:

    So I'm wondering, how much tax should I be paying and what should my allowance be? Because being taxed from £0 doesn't reflect ANY allowance, not even the £2042.
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    (Original post by WhereIsMyMind)
    I'm hoping someone can help me here, because this whole 'tax' scene is rather laborious and I'm not getting anywhere with it.

    I used to work at Sainsbury's and from what I understand, I was being taxed correctly, I left at the end of ~April and with my notice, I was classed as an employee until May getting paid into June (owing holiday pay). I then took up employment at Orange where. I'm not sure what tax code I was on, but I believe I was being taxed 20%. :ninja:

    In December 2009, I returned to Sainsbury's for a month. In December, I had a letter from HMRC stating that my employer (J SAINSBURYS PLC) had informed them of changes to my circumstances and subsequently my tax code was being changed to reflected these change. I would now be on 204T with a tax-free allowance of £2042. £2042 is nothing. I spoke to HMRC at the time and was given some cods-wallop about how these notices were reflecting what the employer was sending through and that when I stop working at Sainsbury's, I would need to inform them of the changes. :confused:

    On the day my contracted ended with Sainsbury's, I spoke to HMRC again, and after making sense to the girl at the other end, she seemed confused and wasn't quite sure of what I was asking. She said that she would look into it. She never called me back, and I didn't hear from them. Frankly, I couldn't be bothered ring them again. Because I wasn't even sure myself what I was supposed to be asking them. I spoke to HR at work and was advised that they would look into it from their end. :o:

    Now, I have received my '2010-11 PAYE CODING NOTICE' which again states that I'm going to be on 204T with an allowance of £2042. It also says, 'we know you have another job..'. I don't. I have told them already! :mad:

    So I'm wondering, how much tax should I be paying and what should my allowance be? Because being taxed from £0 doesn't reflect ANY allowance, not even the £2042.
    That sounds like quite a mess!

    How much do you know about the basics of how Income Tax and the 'Pay As You Earn' (PAYE) system work? Very quickly, there's a standard annual tax-free 'personal allowance' that most people in the UK receive, which is currently £6,475 (shown by a tax code of "647L"). The tax code can be adjusted for a number of reasons (e.g., taxable benefits or income received without having ben taxed), as would seem to be the case here. The personal allowance applies for a given 'tax year' running from 6 April to 5 April, with each year being treated separately for the most part. Take a look at the guide linked in the first post of this thread and in my sig for more details, do feel free to ask if you'd like more explanation.

    What I'd suggest doing comes in two parts:
    • We're now getting near to the end of the current tax year, on 5 April 2010. Rather than continuing down a path that doesn't seem to be getting you much success, I'd wait until April, then collect together evidence of all of your income for the year. The forms P45 that you'll receive when you leave a job, and any P60 that you'll receive from an employer if you're employed at the end of a tax year are the best evidence to use. Take copies of these and send them to your tax office (contact details here) explaining that you think you've overpaid tax for the year and requesting a refund of any overpayment. Do you know how much income you've had for the year, and how much Income Tax you've paid?
    • For the next tax year (2010-11), are you aware of any taxable benefits that you'll be receiving, or any income that won't be correctly taxed? HMRC have been making a mess of tax codes recently (see here, for example), and there's a fair chance that your code is incorrect. The "T" suffix on the end in particular stands out - this indicates that "there are other items [HMRC] need to review in your tax code". Your tax office should be the place to contact to address this, so call them and ask for a specific breakdown of why you have been given this code, rather than the standard 647L. If they can't explain it immediately then perhaps try to speak to someone more senior if you can, or insist that they get back to you in writing with an explanation. Given all the recent problems, I would hope that they should be prepared to deal with your query reasonably promptly.
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    Greetings,

    May I first say, thank you so kindly for producing such a great thread - so much info, so well put - it must have taken a lot of effort on your part.

    I think my situation is a little unique, essentially:

    I have just finished 6 months of 'gap year work', and will now not be earning any more before the end of this tax year.

    I earned £3,362.83 from one employer, but paid no tax on this.
    I earned £2163.00 from another employer, and paid 20% tax on this.

    As my total earnings (£5525.83) are below the minimum earning threshold, I believe I'm entitled to reclaim the £430 tax I paid whilst working at my 2nd job.

    How should I go about explaining this and reclaiming?

    Thanks in advance for any help.

    /Dr Pwn
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    (Original post by Dr_Pwn)
    Greetings,

    May I first say, thank you so kindly for producing such a great thread - so much info, so well put - it must have taken a lot of effort on your part.

    I think my situation is a little unique, essentially:

    I have just finished 6 months of 'gap year work', and will now not be earning any more before the end of this tax year.

    I earned £3,362.83 from one employer, but paid no tax on this.
    I earned £2163.00 from another employer, and paid 20% tax on this.

    As my total earnings (£5525.83) are below the minimum earning threshold, I believe I'm entitled to reclaim the £430 tax I paid whilst working at my 2nd job.

    How should I go about explaining this and reclaiming?

    Thanks in advance for any help.

    /Dr Pwn
    Those earnings are all from the current tax year, I assume (i.e., since 6 April 2009)? If that's the case, I'd suggest writing to your tax office enclosing a copy of the forms P45 that you should have received from each job when you left and requesting a refund. That should provide them with all of the information they need to arrange for a refund to be paid to you. Contact details for your tax office can be found here.
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    So I left work in Janurary and filled out a p50 to get some tax back because I'm a student. A few weeks later they sent me a cheque for £300 and on the letter it said:

    I am please to tell you that your are due a repayment of income tax for the year shown above,

    my calculation of this amount has been sent to you seperately.



    Today I recieved a letter and on the bottom of it, it said:

    A payable order for this amount has been issued to you seperately.
    Your personal allowances exceed your taxable income, no tax is due.

    Tax overpaid : £300
    Repayment Due: £300


    Does this mean I have to pay them back? Does anyone understand what this means? because I am sooo lost and confused!!!
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    That means that you overpaid your tax by £300, and are due a £300 repayment. Don't worry.
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    (Original post by BoysDontCry)
    So I left work in Janurary and filled out a p50 to get some tax back because I'm a student. A few weeks later they sent me a cheque for £300 and on the letter it said:

    I am please to tell you that your are due a repayment of income tax for the year shown above,

    my calculation of this amount has been sent to you seperately.



    Today I recieved a letter and on the bottom of it, it said:

    A payable order for this amount has been issued to you seperately.
    Your personal allowances exceed your taxable income, no tax is due.

    Tax overpaid : £300
    Repayment Due: £300


    Does this mean I have to pay them back? Does anyone understand what this means? because I am sooo lost and confused!!!
    Generally, everyone can earn a certain amount tax-free each year, known as their 'personal allowance'. This is currently £6,475 for most people. What I would assume has happened is that you've had tax deducted from your income during the year (this may or may not have been correct at the time, but don't worry too much about this) but ultimately your income was entirely within this tax-free band so you don't actually have a tax liability for the year (and hence have paid more than you needed to). A 'payable order' is just another way of saying a cheque, which should arrive in the post shortly, by the sound of it.

    When you get the calculation this should make it clear, but if not then feel free to post here and I'll be happy to explain it for you.


    Also, if you're currently employed, check the 'tax code' on your payslip as you may be overpaying tax for the current 'tax year' as well. If the code isn't "647L" then you're quite likely to be overpaying Income Tax, so post again and I can advise you further.


    Finally, I have to point out that being a student does not have any effect on whether you should be paying Income Tax for a year! The important factor is your level of income, not your student status.
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    I was reading the reclaiming tax thing and it says:
    Alternatively, if you are no longer employed, you may be able to claim a refund by completing a form P50 and returning this to your tax office, enclosing parts 2 and 3 of the form P45 that you should receive from your former employer. In order to use this form, you must either have been unemployed for a period of at least three months, or not intend to work again before the start of the next tax year (on the following 6 April). If you do not meet these conditions, you will need to request a refund following the end of the tax year as explained below.
    The tax year ends in April, and I finished working around mid-January. I was on the BR tax code and the manager said it's the wrong tax code, too. Therefore I've been planning to claim back for ages and just came onto here to see which form I need. The bit I've highlighted has threw me a bit, though. I haven't been unemployed for 3 months so how do I claim it back? They owe me £120 :mad: :mad: :mad: :blush:
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    (Original post by mel0n)
    I was reading the reclaiming tax thing and it says:


    The tax year ends in April, and I finished working around mid-January. I was on the BR tax code and the manager said it's the wrong tax code, too. Therefore I've been planning to claim back for ages and just came onto here to see which form I need. The bit I've highlighted has threw me a bit, though. I haven't been unemployed for 3 months so how do I claim it back? They owe me £120 :mad: :mad: :mad: :blush:
    I've just checked the form again and it appears that the timescale is now four weeks rather than three months. I'm not sure when this changed, but I'll update the guide.

    In any case, in your circumstances it sounds as though you don't intend to work again before the end of the tax year, so you can rely on the second part of those conditions (you only need to satisfy one of them to be able to use the P50 for a reclaim).

    Enjoy the refund!
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    (Original post by Illusionary)
    I've just checked the form again and it appears that the timescale is now four weeks rather than three months. I'm not sure when this changed, but I'll update the guide.

    In any case, in your circumstances it sounds as though you don't intend to work again before the end of the tax year, so you can rely on the second part of those conditions (you only need to satisfy one of them to be able to use the P50 for a reclaim).

    Enjoy the refund!
    Ooohh, I get it! How long do they take to refund? Also, I don't know where my local tax office is. I thinkkkk there is one on Deansgate but that's an Inland Revenue office (dunno if it's the same thing), and you need appointments :\ - So would I have to send it off by post? And will I need my P45 for it or any other sort of documents?


    (Maybe I should just have a look at the form for myself to find out this :ninja:) Hahaha thanksss !
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    (Original post by mel0n)
    Ooohh, I get it! How long do they take to refund? Also, I don't know where my local tax office is. I thinkkkk there is one on Deansgate but that's an Inland Revenue office (dunno if it's the same thing), and you need appointments :\ - So would I have to send it off by post? And will I need my P45 for it or any other sort of documents?


    (Maybe I should just have a look at the form for myself to find out this :ninja:) Hahaha thanksss !
    There used to be a tax office just off Deansgate, yes, though I think it may have closed by now (I'm not sure on this, but a lot of tax offices have been reorganised recently). The best thing to do is just to send off the form by post to your tax office, though. You'll need to send your P45 (keep part 1A) along with the form.

    As for the timescale, that can vary quite a lot depending on their workload/backlog. I'd suggest a quick call to your tax office prior to sending the form to find out. Contact details are here.
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    (Original post by Illusionary)
    There used to be a tax office just off Deansgate, yes, though I think it may have closed by now (I'm not sure on this, but a lot of tax offices have been reorganised recently). The best thing to do is just to send off the form by post to your tax office, though. You'll need to send your P45 (keep part 1A) along with the form.

    As for the timescale, that can vary quite a lot depending on their workload/backlog. I'd suggest a quick call to your tax office prior to sending the form to find out. Contact details are here.
    0845 numbers :afraid:... Thanks though! I would need to call them to find out... about how long they approx take?
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    (Original post by mel0n)
    0845 numbers :afraid:... Thanks though! I would need to call them to find out... about how long they approx take?
    There's no need to call them, unless you want to ask about the timescale. Otherwise you can just complete the form and send it off without prior contact.
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    I'm currently trying to fill these forms in. I know they're short (only 2 sides) and should therefore be simple but, being me, I got confused and flummoxed over the simplest of things...

    It says to attach part 2 and 3 of the P45. The thing is:
    Part 1 is the only one that says: 'Total tax in this employment: 148.20'
    Part 2 says: 'Total pay to date: 0.00 Total tax to date: 0.00' and
    Part 3 says: The same ^^


    So if I send off Part 2 and Part 3, to them will it not appear that they do not owe me any tax?

    Also, the form asks about 'pension details'. Is it possible if someone could explain this to me? I'm not sure what to write in, or whether I should leave it blank seeing as, as far as I know, I don't have any sort of pension! :lolwut:
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    (Original post by mel0n)
    I'm currently trying to fill these forms in. I know they're short (only 2 sides) and should therefore be simple but, being me, I got confused and flummoxed over the simplest of things...

    It says to attach part 2 and 3 of the P45. The thing is:
    Part 1 is the only one that says: 'Total tax in this employment: 148.20'
    Part 2 says: 'Total pay to date: 0.00 Total tax to date: 0.00' and
    Part 3 says: The same ^^


    So if I send off Part 2 and Part 3, to them will it not appear that they do not owe me any tax?

    Also, the form asks about 'pension details'. Is it possible if someone could explain this to me? I'm not sure what to write in, or whether I should leave it blank seeing as, as far as I know, I don't have any sort of pension! :lolwut:
    The pension details are likely to be for more complicated situations than yours, so I wouldn't worry about that part; you can probably just leave those boxes blank.

    I'm a little surprised that the form doesn't show your cumulative pay correctly, though I would guess that this is because your employer doesn't have details of your previous income in the tax year and so can't make a statement regarding your total pay and deductions in the year; they only know about the pay that came from them.

    What I'd suggest doing is copying your P45 for your records, then sending the entire form (Parts 1A, 2 and 3) to your tax office along with the P50. Include a brief letter/note explaining the point I've just made above and that should hopefully give them everything that they need to understand the details on your P45 and arrange a refund.
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    (Original post by Illusionary)
    The pension details are likely to be for more complicated situations than yours, so I wouldn't worry about that part; you can probably just leave those boxes blank.

    I'm a little surprised that the form doesn't show your cumulative pay correctly, though I would guess that this is because your employer doesn't have details of your previous income in the tax year and so can't make a statement regarding your total pay and deductions in the year; they only know about the pay that came from them.

    What I'd suggest doing is copying your P45 for your records, then sending the entire form (Parts 1A, 2 and 3) to your tax office along with the P50. Include a brief letter/note explaining the point I've just made above and that should hopefully give them everything that they need to understand the details on your P45 and arrange a refund.
    Ok thanks :ninja: Last few things, the first sheet of the form has a little box thing right at the start, looks similar to the ones where you stick a photo (but this one is obviously for something else) and then a few boxes to fill in saying 'Please use these if you write or call' and I think I have to enter my tax reference and NI number, but it also says 'Issued by:' Do I enter my local tax office here or my previous employer?

    And the address I send it off to would be the local tax office, not the main one or anything, right?

    I'm so dopey.

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