Paying tax on first job?

Question

Hello yes i see there are numerous posts on this but maybe mine is slightly different? i have paid 145.49 on my first pay slip.. 50.32 of that being national insurance, and the overall wage is 557.75 for a week, i looked on some other topics and it says tax is 22% but this is 26%.

This is my first job and i have seen i should get my first 5220 tax free also, but i understand that it can even out over the taxc year.

why would i be paying more than normal on my tax when i should be paying half basically?

i earn 10k a year but i did a lot of overtime to get this up though.

My tax code is 522l w1.

any help?

Thanks

Answer 1

Unfortunately the deduction is correct. You are comparing the tax rate of 22% with your total deductions which, as you say, includes national insurance. Your overall income tax rate is a shade over 17%.

You calculate the deductions as follows -

Free pay (5229 / 52) = 100.56

Taxable pay (557.75 - 100.56) = 457.19

There is a 10% band of 2230 which equals 42.88 per week. The tax on this is, obviously £4.29

The rest of your pay (457.19 - 42.88) = 414.31 is taxed at 22% which equals 91.15.

Your total tax is 4.29 + 91.15 = 95.44.

The national insurance is 11% of the 457.19 figure which is paid in addition to the income tax.

Answer 2

Fengirl's answer as usual is spot on.

If you have already completed a P46, it takes about 4 to 6 weeks to process.

The Revenue will issue to you and your employer a tax code notice, on receipt of that notice providing your circumstances are not unusual and in your question you say its your first job, so I would not expect unusual circumstances then your tax code will change from 522LW1 to 522L. This will take effect on your next payrun after the notice has been issued.

Your employer will then re-calculate the tax you have already paid and maybe issue you with a rebate, or at least a reduced tax burden for one month to take into account any overpayment already made.

Bear in mind that if you are paid monthly then the tax free allowance is applied monthly, also if you are paid weekly then your tax free allowance is applied weekly.

It does not mean that you can earn the first £5220 tax free then tax kicks in.

Also that tax and National Insurance are two different things.

So in effect you have 2 different deductions comming from your wages that go to the Revenue.

The deductions made also are calculated on your total income, so your overtime would have been in the calculation.

It is the National Insurance deductions, that allow you to claim benefits later, such as Job Seeker Allowance should you find yourself out of work, and then ultimatley how much state pension you receive when you retire. Mind you it might have all changed by then!!!

Answer 3

The UK has a "pay as you earn" tax scheme whereby your annual tax burden is estimated (by you!) and you have a fraction of this withheld out of each paycheck (sorry, "paycheque"!)... Ask your payroll department how many dependents you claimed when you filled out your initial tax PAYE paperwork, you may want to reduce it.

Getting a tax refund at the end of the year is stupid, if you think about it: it just means you have made an interest-free loan to the government!

Answer 4

You are on emergency tax - 522L wk1 is emergency tax.
Ask your employer for a form P46. You sign this to say this is your first job and your employer puts you on 522L cumulative - you get a small refund of tax (or pay a bit less tax) in your next pay.
EDIT: G!, the asker says its her first job, so of course she doesnt have a P45.
EDIT: David - the employer is authorised to put the employee on a cumulative code if s/he signs to say its their first job - they don't wait for HMRC to issue a code.

Answer 5

Did you provide a P45 when you started? If yes, it is still processing, so give it another pay cycle or 2. If no, and you do have one, give it to your employer, if no and you don't have one, ask for a P46.

If you have filled in a P46, then it could still be processing. Give it a pay cycle.