Tax Question

Jpinner · 15 Jun 2011 at 18:13

I've been working since the new tax year in April and so have obviously been paying tax since then. I am going back to University in October after a year out working. I was just wondering where I stand with getting some tax back. Don't get me wrong, I do not mind paying tax as I know it's obligatory, I'm just trying to get as much money into my bank as possible before I return to Uni. Some one told me that if I earn over the threshold of £7,475 I will not get any tax back at all.

I am faced with a few possible scenarios;

Scenario 1. I stop working early and get a refund and have a few weeks to read over some stuff ready to return to uni.

Scenario 2. I work literally up until a few days before I go back to uni.

If it is the case that you instantly lose out on a refund after earning over the threshold it would seem a bit pointless continuing to work when I could just get a refund which will give me similar money overall. So my question is; Do you lose out on a refund if you earn over £7,475? Or will I pay tax on the money over £7,475 and get a refund on the money under?

Thanks!

Kemik · 15 Jun 2011 at 18:46

Jpinner said:
Some one told me that if I earn over the threshold of £7,475 I will not get any tax back at all.

Rubbish. Tax is calculated on an annual basis. See here.

You'll be due a refund. Use that thread to calculate your tax due for the year and then compare it to the tax you paid.

They might not refund you until after the end of the tax year incase you get another job before the year end.

Vonhelmet · 15 Jun 2011 at 19:27

Kemik said:
Rubbish. Tax is calculated on an annual basis. See here.

You'll be due a refund. Use that thread to calculate your tax due for the year and then compare it to the tax you paid.

They might not refund you until after the end of the tax year incase you get another job before the year end.

Yep, almost certainly due a refund, assuming you earn less than £7,475 in the tax year. Anything beyond that will be taxed at 20%. I doubt you'll be hitting higher rate

Stumble Bum · 15 Jun 2011 at 19:30

Keep working up to the start of uni. Sounds like you'll have earnt a shade over 7475 for the tax year. You'll therefore only have a small amount of income tax to have paid during the year the rest you can claim back from HMRC at either the end of the tax year or if you know you're not going to work again until the start of the next tax year you apply for a refund as soon as you stop working.

Note that you won't be able to claim back any National insurance, only the excess income tax you have paid.

Jpinner · 15 Jun 2011 at 19:30

Thanks, that's what I thought too! Guess i'll carry on working as long as I can then

!

Stumble Bum - I was aware that I wouldn't receive any of the National Insurance back but wasn't aware of the refund straight away. I will not be working at all as it's my final year and want to devout all my time to my studies, how do I get the refund straight away? Cheers

Stumble Bum · 15 Jun 2011 at 19:39

http://www.hmrc.gov.uk/incometax/stop-work-refund.htm

scroll down to the bit where it says about returning to studies.

Off the top of my head it consists of writing a quick letter saying you think you are owed a tax repayment and sending them your final payslip which should detail your income earnt to date for that tax year. HMRC should do the rest and send a cheque back to you.

EDIT: just fill the P50 in. :d

Jpinner · 15 Jun 2011 at 19:42

Thanks very much, appreciate it

Stumble Bum · 15 Jun 2011 at 19:43

'Tax doesn't have to be taxing'

Wayhay I finally got a situation to use that in.

Kemik · 15 Jun 2011 at 19:47

Stumble Bum said:
http://www.hmrc.gov.uk/incometax/stop-work-refund.htm

scroll down to the bit where it says about returning to studies.

Off the top of my head it consists of writing a quick letter saying you think you are owed a tax repayment and sending them your final payslip which should detail your income earnt to date for that tax year. HMRC should do the rest and send a cheque back to you.

EDIT: just fill the P50 in. :d

He's a bit late to be filling out a P50.

Jpinner · 15 Jun 2011 at 20:21

Kemik said:
He's a bit late to be filling out a P50.

What should I do then? Bear in mind it will be mid September when I will be doing this.. Cheers

Kemik · 15 Jun 2011 at 20:26

Jpinner said:
What should I do then? Bear in mind it will be mid September when I will be doing this.. Cheers

Ah, I was thinking about a form P38. Referring to income for the year less than personal allowance.

From experience you'll have to really push them to have any luck of processing a refund before the end of the tax year. You can try, but make sure you follow it up with a few phone calls. Note: They have a 3 month backlog.

chippie · 15 Jun 2011 at 20:30

Kemik said:
He's a bit late to be filling out a P50.

No he isn't.

A P50 is used when you stop working and do not intend to work again for the rest of that tax year (or for at least 4 weeks) so is exactly what needs to be completed once he stops working.

There won't be any hassle with getting an in-year refund if using P50, as it is exactly what the form is designed for.

I think you might have been thinking of the P38(S) Kemik.

Edit: P50 can be printed from HERE

Jpinner · 15 Jun 2011 at 22:36

Thanks Chippie