help i dont understand my tax code!!!???

Question

I am being paid £1017.96 gross per month, on a tax code of 503L, how much tax does this work out as per month???
also i have read somewhere that its an emergncy tax code and i've been at my current job for 7 months now, so should the tax code have changed since then?

thanks in advance for the help!

Answer 1

for the tax code 503L your personal allowance is 5035 per year. (soon to be 5225 a year)

from 503L your monthly tax free allowance is
£416.67 for 500 from tax code and
£3.25 for 3 from tax code
total monthly allowance is £419.92


gross = £1017.96
less tax free allowance = £419.92
taxable allowance = £598.04

tax due on
£500 is £110
£98 is £21.56
less £21.51 (thats the 10% on taxable 2150)

tax due is £110.05

take home pay is £907.91

this will vary slightly from month yo month as tax is usually done on a cummulative basis but if your tax code has M1 next to it its done on a month 1 basis and the amount above will be the tax amount you always pay every month.

all of the above assumes no pensions, statutory deductions or pre tax deductions.

check the last link for more on understanding your tax code

Answer 2

Tax Code 503L is the normal tax code for the tax year 2006 -2007 for most people. It is also the tax code to use if your employer is told to apply an emergency tax code for 2006 -2007. But don't worry you are not being overcharged tax because of the tax code.

503L means that in a given year you will not be charged tax on earnings upto £5035.00.

(The tax code for 2007-2008 is going to be 522L which means that you can earn upto £5225.00 next year before you are charged tax.)

The tax free bit is taken into account every pay day so if you are paid monthly £5035.00 / 12 = £419.33 is not taxed the next level is then charged at 10% upto £2150.00 per year.

= £2150/12 = £179.17 would cost you £17.92 in tax

the next level is charged at 22% upto £33,300

= £1017.96 - 419.33 - 179.17 = £419.46 x 22% = £92.28

Therfore you would pay £17.92 + £92.28 = £110.20 tax per month on the gross that you have stated.

The next level is 40% but you do not come into this range.

Remember this is tax only, you will also have to pay National Insurance as well. That is a bit more complicated.

There are a myriad of calculators on the net I have included one in the links below which calculate both tax and NI due.

Answer 3

The tax code does not refer to your earnings but to the allowances that can be set against your gross pay before tax becomes due.When you received your coding for the coming year you should have received a summary of how the code was calculated and also a booklet advising of different allowances etc.A new code should be used from the start of the new tax year commencing the 6th April.

Answer 4

L - is used if you are eligible for the basic personal allowance

Which means:
Personal allowance for the 2006/07 tax year=

£5,035 / 52 = £97

ie. this student will not pay tax on the first £97 of weekly earnings but any earnings above this amount will be taxed - F**kers!

You should look at your pay slip to see what is taken per month.

Hope this helps

Answer 5

as emergency tax code is the same as single person code it will look the same. however it isnt a week 1 else it would have an X after it so it is your single person code.

times by 10 divide by 52 and that how much you can earn before paying tax in a week.

Answer 6

You'll pay approx £200 per month on this salary...Go to your Tax office if you have a query.

Answer 7

I would imagine you should be getting approximately 800 pounds a month. I dont think that is emergency tax. 503L means that you don't get taxed on the first £5030 but you get taxed at, I think, 40% on the money you earn after that.