National Insurance allowance

[Lance]

If you left BigCo A 6 months into the tax year for BigCo B Your new pay slip would still have a "tax Free" element based on your tax code. They wouldn't say "Sorry you earnt more than 11k at BigCo A so we are ignoring your taxcode and you'll need to reclaim it back from HMRC via SA"

This I understand. Your P45 will have your gross income and tax to date. And the tax you pay each month is based on an assumption that you will be paid the same for the rest of the year. If your subsequent pay is a little different the PAYE system will smooth it out. On the other hand if it's wildly different, say for example you don't work for 6 months, you will likely have overpaid as the PAYE assumption is wrong.

The OP has already had £25k gross, so already paid half the tax based on an assumed £50k salary. So he has NO ALLOWANCE LEFT.

[pmasoft]

This I understand. Your P45 will have your gross income and tax to date. And the tax you pay each month is based on an assumption that you will be paid the same for the rest of the year. If your subsequent pay is a little different the PAYE system will smooth it out. On the other hand if it's wildly different, say for example you don't work for 6 months, you will likely have overpaid as the PAYE assumption is wrong.

The OP has already had £25k gross, so already paid half the tax based on an assumed £50k salary. So he has NO ALLOWANCE LEFT.

No you're wrong (partially). That's not how it works.

The tax is calculated on what you have earnt to date not on what you expecting to earn in the rest of the year. Although there is an element of prescience in calculating if you need to be paying higher rate tax and in that case they will start deducting 40% or more possibly from Month1 on that portion of your salary.

It doesn't, however, matter if his new salary is 50k as before or 200k, he will still have unused tax allowance of, in this case, 50% of his tax code to be used in the second half of the year.

[Lance]

[/B]


No you're wrong (partially). That's not how it works.

The tax is calculated on what you have earnt to date not on what you expecting to earn in the rest of the year. Although there is an element of prescience in calculating if you need to be paying higher rate tax and in that case they will start deducting 40% or more possibly from Month1 on that portion of your salary.

It doesn't, however, matter if his new salary is 50k as before or 200k, he will still have unused tax allowance of, in this case, 50% of his tax code to be used in the second half of the year.

So if I get paid £100,000 in the first month of the tax year how much income tax will be deducted from that 100k gross figure?

[pmasoft]

So if I get paid £100,000 in the first month of the tax year how much income tax will be deducted from that 100k gross figure?

No idea, but you will not receive 11k tax free. Only 11k/12 will be tax free IF you are paying it through PAYE using the cumulative method

See below which both explains and confirms what I have been saying:

https://community.intuit.com/article...-basis-uk-only

[TheCyclingProgrammer]

pmasoft - you really have no idea what you're on about. The only explanation is that you're an idiot, or trolling.

You really think somebody who has earned £25k can earn more without increasing their tax liability? Do you even know what tax liability means? I'm starting to think not.

Nice of you to conveniently ignore my detailed example that shows how clearly wrong you are. Everybody else has pointed out that you're wrong. Because you are.

[TheCyclingProgrammer]

As for working in the financial sector: Yes over 20 years thank you, plus 30 years running my companys' payrolls with up to 14 staff and managing Payroll for Barclays for several years.

If this is true then I'm sorry for your previous employers and clients. I suspect it's a lie. Because somebody with that experience wouldn't fail to grasp such fundamental concepts.

PAYE has no bearing on your tax liability, just what you get paid month to month. If it results in under or over payments of tax it will be corrected at the end of the year.

Please, try and explain to me in simple terms how somebody who has already earned over the personal allowance threshold can earn any more WITHOUT increasing their overall tax liability.

Seriously even a child could understand this: who pays more tax - somebody earning £25k in a year or somebody earning £30k?

[Lance]

pmasoft - you really have no idea what you're on about. The only explanation is that you're an idiot, or trolling.

You really think somebody who has earned £25k can earn more without increasing their tax liability? Do you even know what TAX liability means?

Nice of you to conveniently ignore my detailed example that shows how clearly wrong you are.

I don't think he's trolling.

The amount of tax due after 1 month of £100k gross is £43,841.67.
Assuming no more income for the year £14241.67 is the overpayment to be claimed back.

And no more tax allowance for the other 11 months either. How on earth could there be?

[TheCyclingProgrammer]

I don't think he's trolling.

The amount of tax due after 1 month of £100k gross is £43,841.67.
Assuming no more income for the year £14241.67 is the overpayment to be claimed back.

And no more tax allowance for the other 11 months either. How on earth could there be?

He seems to think that because PAYE effectively lets you earn a certain amount each month before you PAY tax in that month that the money is "tax free".

My definition of "tax free" is "does not increase my tax liability" - apparently his is "does not incur any tax at the point it's paid even though it still increases your net liability for the year".

[pmasoft]

There really are some ignorant morons on this site!

[pmasoft]

He seems to think that because PAYE effectively lets you earn a certain amount each month before you PAY tax in that month that the money is "tax free".

My definition of "tax free" is "does not increase my tax liability" - apparently his is "does not incur any tax at the point it's paid even though it still increases your net liability for the year".

"He seems to think"? I know that is how it works.
I wasn't saying earning money does not increase your liablity to be taxed on it at any point in my posts. The OP was told he had no more allowance to use and I messaged that he would under the cumulative tax method used by HMRC/BigCo