Help me with tax please??

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AspiringPilot
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I just started my very first job exactly a month ago, my gross is approx. £1600 per month. I’m gonna get my first paycheck soon and I was expecting around £1300 net pay due to taxes but I’ve just been told that I may be taxfree for the first £12500 that I earn? I’m all very new to this adult stuff and I’m so confused. How much should I expect on my first paycheck? Should I expect to be taxfree (except NI) for about 7 months until I reach the £12500 threshold? Help me pleaseee. Thank you!!
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GabiAbi84
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No, you will pay tax from the beginning if you earn over the monthly threshold.
If you then subsequently earn less than the annual tax free threshold then you will be given a tax rebate.
So yes, your monthly take home will be around about £1300
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uberteknik
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(Original post by AspiringPilot)
I just started my very first job exactly a month ago, my gross is approx. £1600 per month. I’m gonna get my first paycheck soon and I was expecting around £1300 net pay due to taxes but I’ve just been told that I may be taxfree for the first £12500 that I earn? I’m all very new to this adult stuff and I’m so confused. How much should I expect on my first paycheck? Should I expect to be taxfree (except NI) for about 7 months until I reach the £12500 threshold? Help me pleaseee. Thank you!!
The tax allowance is for the financial year 2021/22 starting and ending in the first week of April.

See ^^

Your tax calculation will likely assume your earnings continue at the same rate for the rest of the year and hence the allowance will be spread across the 12 months. i.e. £12,570 divided by 12 months (remaining for this financial year) is £1047 approx. So you will get taxed on the difference: £553 /mth @ 20% = £110.

You will also pay National Insurance of around £100 /mth. Also factor in enrolment to a mandatory pension scheme @ 5% of earnings.

Meaning your take home pay this year is likely to be around:

£1600 - £110 - £100 - £80 = £1310
Last edited by uberteknik; 2 months ago
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Final Fantasy
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The 'tax free' allowance is just breadcrumbs as you'll soon find out. Say goodbye to half your money in a few years when they take nearly 50% of your income straight off. Nothing you can do about it either and if you try, HMRC will just come after you with more taxes and fees. Even if you go to another country, they will still try to rob you blind and pay double tax.
Last edited by Final Fantasy; 2 months ago
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Reue
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(Original post by Final Fantasy)
The 'tax free' allowance is just breadcrumbs as you'll soon find out. Say goodbye to half your money in a few years when they take nearly 50% of your income straight off. Nothing you can do about it either and if you try, HMRC will just come after you with more taxes and fees. Even if you go to another country, they will still try to rob you blind and pay double tax.
That's not true at all.

Average salary in the UK is about £31k. Without making tax savings from pension contributions or other salary sacrifice schemes the amount taken in tax is about £6.25k.. so 20% overall.

If you are fortunate enough to earn more than the average, you will start paying a higher % in overall tax however lots of people mitigate that via pension contributions.

Add in the £20k annual ISA allowance and we have one of the most generous taxation systems in the western world.

As for "double tax": https://www.gov.uk/tax-foreign-income/taxed-twice
Last edited by Reue; 2 months ago
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NovaeSci
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Check out the below site and enter your income and it should tell you your take home pay. Of course other factors come into play. But it will give you a good idea:

https://www.moneysavingexpert.com/tax-calculator/
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Final Fantasy
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(Original post by Reue)
That's not true at all.

Average salary in the UK is about £31k. Without making tax savings from pension contributions or other salary sacrifice schemes the amount taken in tax is about £6.25k.. so 20% overall.

If you are fortunate enough to earn more than the average, you will start paying a higher % in overall tax however lots of people mitigate that via pension contributions.

Add in the £20k annual ISA allowance and we have one of the most generous taxation systems in the western world.

As for "double tax": https://www.gov.uk/tax-foreign-income/taxed-twice
I don't care what the average is. Maybe it's not true for you. Not true for all. It is true in my case that HMRC takes at least 40 - 45% straight off every time for perm roles. And if I try to stay outside IR35 contracts for too long a period they start asking questions. My current one is now inside IR35 and it's ridiculous almost half the money just disappears.
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Reue
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(Original post by Final Fantasy)
My current one is now inside IR35 and it's ridiculous almost half the money just disappears.
Adjust your day rate requirements then. If you are a legitimate contractor it is relatively easy to stay outside IR35.
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Final Fantasy
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(Original post by Reue)
Adjust your day rate requirements then. If you are a legitimate contractor it is relatively easy to stay outside IR35.
That's not the point. I am getting taxed MORE than perm employees. And I only went for this one because the rate is high enough to offset HMRC's thieving greedy hands.
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Reue
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(Original post by Final Fantasy)
That's not the point. I am getting taxed MORE than perm employees.
Then go be a perm employee instead.

You wont get any sympathy that you are unable to continue exploiting the tax system thanks to IR35.
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Final Fantasy
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(Original post by Reue)
Then go be a perm employee instead.

You wont get any sympathy that you are unable to continue exploiting the tax system thanks to IR35.
I'm not looking for sympathy. It appears all you've done is assume and put words in my mouth. I am simply stating facts, nothing more. I don't need nor want nor have asked for your sympathy.

I've done all types of roles, and stating my experiences and opinions on the matter.

No need to act like a know-it-all on your high horse. As if you are some shining beacon of a law abiding tax payer... :lol: please.
Last edited by Final Fantasy; 2 months ago
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Reue
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(Original post by Final Fantasy)
I am simply stating facts
You stated a load of opinion and your own very unique circumstances.

A majority of people will not come close to paying 50% tax.
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Final Fantasy
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(Original post by Reue)
You stated a load of opinion and your own very unique circumstances.

A majority of people will not come close to paying 50% tax.
Yes I stated my own experiences. You then proceeded to make a blanket "that's not true at all" statement and decided to assume for the entire world. This might come as a shock, but you don't speak for everyone. :rolleyes:
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Reue
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(Original post by Final Fantasy)
Yes I stated my own experiences. You then proceeded to make a blanket "that's not true at all" statement and decided to assume for the entire world. This might come as a shock, but you don't speak for everyone. :rolleyes:
I apologise; I should have clarified that what you said was not true for a very large majority of people.
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Quady
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(Original post by Final Fantasy)
Yes I stated my own experiences.
Which doesn't bare any relation to the OP's - more than half their income is covered by the personal allowance, pretty much two thirds.
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Final Fantasy
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(Original post by Quady)
Which doesn't bare any relation to the OP's - more than half their income is covered by the personal allowance, pretty much two thirds.
If you have anything to say to the OP then say it.
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Quady
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(Original post by AspiringPilot)
I just started my very first job exactly a month ago, my gross is approx. £1600 per month. I’m gonna get my first paycheck soon and I was expecting around £1300 net pay due to taxes but I’ve just been told that I may be taxfree for the first £12500 that I earn? I’m all very new to this adult stuff and I’m so confused. How much should I expect on my first paycheck? Should I expect to be taxfree (except NI) for about 7 months until I reach the £12500 threshold? Help me pleaseee. Thank you!!
https://www.thesalarycalculator.co.uk/salary.php

It's taxed the you get the same regardless whether it's the start or end of the financial year. You can claim a rebate the next year if you've overpaid.
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Jimmy104
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If this is your first taxable income this year then you are going to pay very little tax.The standard annual allowance this year is £12570 and is ÷ by 12 to give you a monthly allowance of £1047. The allowance is cumulative meaning it adds £1047 every month and the tax year starts on 06/04/2021. This is considered month 1 of the tax year.

If your 1st pay is £1600 gross in August then you will have built up 5 months of tax free allowance so:
5 × £1047 = £5235 of tax free income against your 1st salary of £1600 = £0 tax.
This will continue to build up so September would be
6 × £1047 = £6282 against your new gross income earned to date of £3200 = £0 tax.

This will continue until your gross income finally passes your tax fee income and then you will pay tax at basic rate.So if August is your first salary of £1600 you are not going to pay tax until March next year:

August to March, 8 × £1600 = £12800
Annual allowance, 12 x £1047 =£12570
£12800 - £12570 = £220 taxable @ 20% = £44 tax payable.

Other factors can come into the equation such as being on an M1/W1 code when you start but this can be sorted with a quick call to HMRC.Hope this information helps.
Last edited by Jimmy104; 1 month ago
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Emma:-)
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(Original post by uberteknik)
The tax allowance is for the financial year 2021/22 starting and ending in the first week of April.

See ^^

Your tax calculation will likely assume your earnings continue at the same rate for the rest of the year and hence the allowance will be spread across the 12 months. i.e. £12,570 divided by 12 months (remaining for this financial year) is £1047 approx. So you will get taxed on the difference: £553 /mth @ 20% = £110.

You will also pay National Insurance of around £100 /mth. Also factor in enrolment to a mandatory pension scheme @ 5% of earnings.

Meaning your take home pay this year is likely to be around:

£1600 - £110 - £100 - £80 = £1310
Exactly.
And if you end up earning less than the threshold then you will get a rebate after the end of the tax year.
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