#U.K. #Payroll #IncomeTax #NationalInsurance
Hey everyone! 👋 So, I recently started a new job after taking some time off and I noticed something interesting on my payslip – I’m paying National Insurance but no income tax. 🧐
I did a bit of research online, but I’m still a bit confused. Could someone clarify if this is correct or if I should be putting money aside for when income tax kicks in? Here are some details to consider:
– This is my first job in about a year and a half
– I know the first £12,570 is not taxable, but do they just not tax you until you reach that amount?
– I’m on a 0 hours contract – does that affect anything?
Any simple explanation or advice would be greatly appreciated! Thanks in advance! 🤗
Possible solution:
It’s possible that you are not yet earning enough to pay income tax, but it’s always good to double-check with HR or a tax professional to be sure. It’s also a good idea to start setting aside some money just in case you do end up owing income tax in the future.
That sounds right. As you say, for income tax, the first £12,570 is not taxable. Because you’ve started a job three months into the new tax year (which starts in April), you have ~£3,000 of that allowance to use that you didn’t take advantage of. Once you’ve earned more than that, they should start to deduct income tax, taking the remainder of your personal allowance.
As I understand, national insurance doesn’t work that way. If you earn more than the monthly threshold in any particular month, national insurance will be deducted.
It’s covered by the wiki:
https://ukpersonal.finance/income-tax
But yes, you have built up 3 months of personal allowance since April before you started receiving any income, which is why you’ve paid no tax. Once your income for the year passes the prorated personal allowance (you get about £1k per month) then you’ll start paying tax.
NI is calculated per pay period rather than annual, which is why you’ve been paying that
Your personal allowance is split by your pay frequency. So if you’re paid monthly, you get 1/12th of your allowance.
If you’re on a 1257L tax code, you get £1048 each month before you start paying tax. If you did not have any income in April, you have April’s freepay to use against your May income along with the May freepay. You can calculate your freepay and if your cumulative earnings for this year is less than the freepay, then it is correct that you have not paid any tax.
For NI, if you are on table A, you can earn £1047.50 before paying any national insurance. (This is the primary monthly threshold).
Please do apply for a personal tax account via the HMRC site to see the data that they have for your income for this tax year.