Paychecks at work

I've been working part time since I was 16 (now 17) and I've just gotten acess to my payslips- I'm being deducted 20% on every paycheck and I'm not sure why. My hours have been cut to 5.5 a week since December so my yearly contracted hours only pay £3k total and even before then I was only working 15 hours so still not enough for the £12.5k threshold. Sorry if I'm being totally stupid, I know nothing about tax etc 🙈

Reply 1

DataVenia

Volunteer Team, Clearing and Applications Advisor

Original post by 10493002730

The most common reason for this kind of issue is the tax code which your employer is using for you.

As you allude to above, there is a personal allowance of £12,570 this tax year, which you can earn before paying any tax. However, although that figure applies to the vast majority of people, it doesn't apply to absolutely everybody. For example, some people may have overpaid or under paid tax in the prior year, so the amount they can earn this year before paying tax is adjusted to compensate. (There are other reasons, but that the easiest one to explain). HMRC assign everyone a tax code which tells their employer how much they can earn before the employer needs to start withholding tax and sending it to HMRC. For those with a personal allowance of £12,570 (i.e. the vast majority f people), this tax code will be 1257L (i.e. the personal allowance, with the 0 dropped and an L added). However, if an employer doesn't know what your tax code is, the can't just assume it's 1257L, They will instead use an "emergency" tax code. For example, they might use 0T which means the employer doesn't hasn't enough information to complete a Starter Checklist. The tax code 0T has zero tax-free pay. So you pay tax on every penny your earn. That may well be what's happened to you. Don't worry - it can be undone (you haven't lost that money for good).

Look through your payslip carefully and thoroughly. Can you see anything on there which says "tax code" or "code" or something like that? If so, what does it have written alongside it? (My money's on 0T.)

You best bet is to contact your employer and ask why you're on the tax code you are, or to contact HMRC on 0300 200 3300 and say that you think you're on the wrong ta code.