Income tax

noginn · 2 Jun 2006 at 01:53

My first real full-time job is starting soon (student placement year), I'm going to be on £12,500 pa and I'm trying to work out my finances, how much I have coming in and out. Although I'm not 100% sure on how much i'll see of that after tax...

Is it £12,500 - 22% = £9750 pa = £812.5 pm?

Time to go into the big wide world

Uhtred · 2 Jun 2006 at 01:54

about £850 i think

noginn · 2 Jun 2006 at 01:58

Hopefully, could do with as much money as possible as going to cost an arm and a leg travelling back and forth on train to Leicester to see my girlfriend.

Not to mention I want to buy a new mountain bike as I'll be living near some countryside again

Jonny ///M · 2 Jun 2006 at 01:59

The op's calculations seem bang on.

£12500 x .78 /12 = £812 a month.

gimme some!

Mountainbike buying = go second hand,some bargains to be had if you know what to look for.

Mon · 2 Jun 2006 at 02:01

You have different band of income tax not all is at 22%

personal allowance of £5035 pa
Taxable Bands
Taxable Bands Allowances

2006-07 (£)
Starting rate 10% 0 - 2,090
Basic rate 22% 2,091 - 32,400
Higher rate 40% over 33,300

I make it £1384.3 tax pa
net pay £12,500-£1384.3= £11,116pa /13 = £855.07

here

Uhtred · 2 Jun 2006 at 02:08

Jonny ///M said:
The op's calculations seem bang on.

£12500 x .78 /12 = £812 a month. gimme some!

Mountainbike buying = go second hand,some bargains to be had if you know what to look for.

you need to factor in the tax free allowance, should be a little higher than that

Mon · 2 Jun 2006 at 02:15

Zap said:
you need to factor in the tax free allowance, should be a little higher than that

and the starting rate at 10%

noginn · 2 Jun 2006 at 02:17

Mon said:
I make it £1384.3 tax pa
net pay £12,500-£1384.3= £11,116pa /13 = £855.07

Why /13 though?

Beansprout · 2 Jun 2006 at 02:18

http://www.moneyweb.co.uk/products/tax/income/generalincometaxni.html

Mon · 2 Jun 2006 at 02:19

noginn said:
Why /13 though?

normally people get paid every 4 weeks or 13 pay days each year.

Jonny ///M · 2 Jun 2006 at 02:20

Ah ok i am a noob. New to all this tax stuff.I just know its evil

noginn · 2 Jun 2006 at 02:20

Oh OK I see

Mon · 2 Jun 2006 at 02:28

Jonny ///M said:
Ah ok i am a noob. New to all this tax stuff.I just know its evil

two things you can count on in life, death and the taxman.

you can't avoid it.

Jonny ///M · 2 Jun 2006 at 02:38

Mon said:
two things you can count on in life, death and the taxman.

you can't avoid it.

Well you can,buy drugs from some big gangster mafia people.......sell it onto some other scumbag who will then sell it onto the junkies........make loads of money that way!

But i am not a junkie feeding scumbag drug dealer so i'll just pay tax. I wish they would just take it off instead of showing you it on the payslip

Dugganator · 2 Jun 2006 at 02:41

Higher rate 40% over 33,300

Is that right 40% tax when you earn over 33,300PA thats a joke really. Tax Sucks

Jonny ///M · 2 Jun 2006 at 02:47

Duggan said:
Higher rate 40% over 33,300

Is that right 40% tax when you earn over 33,300PA thats a joke really. Tax Sucks

I wonder,does this apply to say......drawings,dividends and such????

If you own or are a major shareholder in a business or something.......i would just call dibs on drawings :eek:

40%!!! thats OTT

Beansprout · 2 Jun 2006 at 02:56

Capital gains tax has a personal allowance of £8,800pa but above that is taxed. More info here

sparemips · 2 Jun 2006 at 03:20

National Insurance will be payable as well.

Sequoia · 2 Jun 2006 at 08:49

Beansprout said:
Capital gains tax has a personal allowance of £8,800pa but above that is taxed. More info here

If that's in reference to Jonny ///M's question about dividends, etc, I'd point out that dividends aren't capital gains, they're income, so CGT doesn't apply. However, if the shares (or most other capital assets) you have go up in value, then you're liable for Capital Gains Tax on that increase in value .... but not until you "dispose" of them.

Jonny ///M said:
I wonder,does this apply to say......drawings,dividends and such????

If you own or are a major shareholder in a business or something.......i would just call dibs on drawings

40%!!! thats OTT

Yes, it does.

Most dividends are paid to you 'tax paid', but it's paid at basic rate. So unless you're a higher-rate tax-payer, the cheque you get from the company will be the end of it for most people. But if you're a higher-rate tax payer, you'll need to pay the extra to take the rate up to 40%.

If you're self-employed, or have other sources of income that necessitate filling in a tax-return, then on that return, you have to include the gross (pre-tax) dividend as income, and that it added to your overall income for the year so that tax is calculated on it in the normal way. Then, once the tax has been calculated, you deduct the tax you've already paid on those div's from the tax outstanding. Thus, because the 40% is only charged on the marginal income above the band threshold, you'll pay it on the div's if appropriate, and the calculation has left you with any additional tax due as outstanding.

You mention drawings. That's a bit different. It's a term usually applied to the self-employed taking cash out of the "business". That you don't pay tax on. The logic is that as you pay tax on chargeable profits, whether you draw it out or not is irrelevant, since as a self-employed person, it's your money whether it's drawn or left in a business bank account. The account you choose to leave it in has no bearing, because you're liable for Income Tax on profit, not cash deposits.

singist · 2 Jun 2006 at 08:50

As a rough guide ...... unless you are on emergency tax, allow for losing 1/3 of your money to tax and insurance.

Income tax

Wise Guy