does anyone know abt income tax?

[daisydee43]

hi

i work part time and am employed but thought i thought i dont pay tax as earn just under £10k but we have to do conpulsory overtime which pushes me over the tax free bracket by over £1k. i have been taxed this month but only a small amount - does this mean you get taxed on any earnings over £10k? as opposed to paying tax on ur full earnings?

thanks

just to make it more sense i will earn £11k a year with overtime

Yes, that's right. You only get taxed on the earnings over the threshold, not the whole lot - that'd be horribly unfair!

So you will only get taxed on the £1k.

Yup,
You earn £8,000 tax and NI free
the next £2,000 is liable to NI at 13%
the next £30,000 gets taxed at 33% (tax and NI)

its complicated but makes almost sense in the end

If you want to have a play with figures, then there are PAYE calculators around which will let you enter in any salary (gross pay) you like and see the resulting take home (net pay) amount. www.mranchovy.com/calc is one of may calculators. Leave the taxcode as 1000L (that means the first 10,000 of gross salary is free from income tax).

The tax allowance is usually split over the year.

If you have a "normal" tax code of 1000L you are given £833.33 per month tax free.
Tax is calculated on your earnings to date in the tax year. You save up the tax free allowance as you go if you don't earn enough to pay tax.

For example, we are now in tax month 7.
If you've earned more than 7 x the £833.33 threshold (£5,833.31) since April up to and including your October pay, you will pay tax at 20% on the difference less any tax you've paid since April.

The threshold for national insurance is £663 per month. You pay 12% National Insurance on earnings above that.

Hope that makes sense! :-)