I just noticed when i did my last payroll, that one of the employees on 747l didnt pay any tax. He joined us on 30th aug and on his p46 he is ticked Box A and was his first salary with us. I thought, he would be taxed as he was on 747l. Also , can someone explain what is tax code K. An example would be appropriate. Thank you.
Someone who ticks box A can earn up to £7479/year before they pay any tax. This income is pro-rated, so by this time of year an employee can earn (cumulatively) more than £3500 before they'll pay any tax.
K tax codes are in reverse. You multiply the tax code by 10 and add that sum to the employee's annual earnings before calculating their tax, so someone earning £10,000/year with a K200 tax code would pay tax as if their earnings were £12,000/year.
Thanks very much. does it mean, a person new to the uk and on his first job, will not pay any tax until his/her salary reaches £3500 in the very first year of employment? I hope it wont be the case if the employee works for the same employer in the 2nd year, right?
Thanks very much. does it mean, a person new to the uk and on his first job, will not pay any tax until his/her salary reaches £3500 in the very first year of employment? I hope it wont be the case if the employee works for the same employer in the 2nd year, right?
Gustavo
No.
747L means that the person earns £7479 annually before they pay tax.
But that tax free allowance is pro-rated to £7479/12 each cumulative month, or £7479/52 each cumulative week.
So AT THE MOMENT a new starter on 747L with no previous earnings could earn about £3500 in their first pay packet before they'd pay any tax. That sum goes up by £7479/12 for each month that goes by. So if you paid them c. £3500 this month and then another £600 next month they'd still pay no tax, because their tax-free allowance would have gone up too.
By the end of the year, as long as their cumulative earnings were lower than £7479 they'd pay no tax this year.
-- Edited by Tom McClelland on Tuesday 13th of September 2011 12:11:26 PM
thanks for the reply. just wonder then why the employee earning 1200 paid tax the next time? didnt pay any tax on month 1, but paid tax in month 2, please could you explain with example?
