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Question.
I am due to start a new job; this will be my first job since leaving university. What do I have to give to my new employer and what tax will I have to pay?
Answer.
If you have a P45 form from either a previous part time job or state benefits you should give this to your new employer. Otherwise, you will be asked to complete a form P46 confirming if this is your first job, main or only job, or your second source of income. This will ensure the correct PAYE tax code is allocated to you.
As the tax free personal allowance for under 65’s is £7,475 for 2011/12 the basic tax code is 747L. The use of this tax code will ensure that you do not pay tax on the first £143 earned per week. Therefore, if you start work in week 10 and you have no other earnings from 6 April 2011; you will not start paying tax until your income exceeds £1,437.
If your tax code is 747L week 1 basis this means that you are taxed weekly rather than on a cumulative basis.
You will also start paying national insurance immediately on all earnings above £139 per week as, unlike income tax, the lower earnings band for national insurance is not cumulative.
If, like most graduates, you have an outstanding student loan, then depending on the level of your earnings, you may also have student loan repayments deducted from your earnings.
Usually, the amount you will pay back is calculated as 9% of your income over the starting limit, currently £15,000 per annum. As each pay day is looked at separately, your repayments may vary according to how much you have been paid in that week or month.
The advice in this column is specific to the facts surrounding the questions posed. Neither FPM Accountants LLP nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
Email a.mccardle@fpmca.com |