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Where Taxpayers and Advisers Meet

Income Tax

Joined:Wed Aug 06, 2008 4:08 pm

Postby Rocker » Mon Apr 28, 2008 11:02 am

I'm trying to work out how to calculate Income Tax. I am 22 years old and i work a 40 hour week with some overtime and i don't earn more than £25k. I don't pay into any pension. I can calculate NIC to the penny, so i know roughly what i am doing.

At the moment i believe to work it out for one weeks pay with the tax code 543L. I should divide £5435 by 52 = £104.519. I then minus the weeks wages before tax by £104.519. The result of that i then calculate 20% of it and that should be the amount of tax.

I have two pay slips with a different amount of hours worked so therefore the amount i get paid is different. I tried to calculate the amount of tax on both pay slips and on one i get a figure that is 6p below the amount i got taxed and the other was 14p above the amount.

Ive just read how to calculate it from this website to make sure i was doing it correctly. I noticed it mentioned something about savings income and you get taxed 10%. Whats that exactly? I pay £30 direct-debit weekly in to a savers account at my bank, is this classed as savings income?

Please may someone tell me the error of my ways.

Joined:Wed Aug 06, 2008 4:06 pm

Postby smithy05 » Mon Apr 28, 2008 11:50 am

You are absolutely right in your calculations.The personal allowance this year is 5435 so divide this by 52 to get the weekly tax free allowance.Anything above this will be charged at the new rate of 20% until you go into the higher rate tax bracket. Although Gordon abolished the 10% rate band you still only pay 10% on your savings income BUT only if your total income after you have deducted the personal allowance is just over 2090 or something near that. Hope this helps.

Joined:Wed Aug 06, 2008 4:08 pm

Postby Rocker » Mon Apr 28, 2008 12:07 pm

I am absolutely positive i have done my calculations correctly.

Ive got a new job that I'm starting in two weeks time so i don't mind saying what i get now because its all about to change.

here's the 2 weekly pay slips
1st = Before tax = 326.51,tax = 44.20, i work it out to be 44.40.
2nd = Before tax = 295.25,tax = 38.20, i work it out to be 38.15.

If you get what it says in tax. please may you tell me exactly how you've done the calculation.

Joined:Wed Aug 06, 2008 3:40 pm

Postby al_eebee » Mon Apr 28, 2008 10:54 pm

You are talking of pence.

Because your code drops the final digit from allowances available (5435 becomes 543L) the tax table actually work on the code plus 9 as the allowances due, or certainly used to. So 543L calculates on 1/52 of 5439.

There will always be small differences as a result.

NIC does not have that problem because it is the same "allowance" for all

Joined:Wed Aug 06, 2008 4:08 pm

Postby Rocker » Wed Apr 30, 2008 12:58 pm

I like to be as perfect as possible. I know the result i get is only up to about 20p out. But too me that feels too much. If it was within 5p then id be quite happy. Through the research Ive done i don't think that this will ever happen. All the online calculators Ive found give completely separate answers.

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