How does it work?

Former Member

I've been approached by a company for a trainee job - the salary is only 10,433.33 which is a lot less than I'm used to but I gather you only pay tax after 15 grand or so. Is that right? Also, would I pay tax until they realised I wouldn't be earning over 15k?
I'm all very confused, hope I haven't confused you!

Former Member

No mate, you'd still pay income tax. Everyone has an allowance for 2007-8 i think its 5,225 of which you wont be taxed on. After this you will be taxed on the rest.

Former Member

You'll get taxed on the bit that is over your allowance.

You don't start paying back a student loan until you get to £15k, maybe that's where you got the idea from. If you are on standard monthly/weekly pay thats fairly consistent through the year then you should get taxed at the right rate all through the year.

Former Member

http://www.hmrc.gov.uk/rates/it.htm

I think the way it works out is that out of your salary:

the first £5,200 or so is tax free.

the next £2,300 on top of that has 10% skimmed off

then after that it's 22% skimmed off until you hit a salary of 40k or something where you have to pay 40% of all extra earning to the inland revenue.

Former Member

Check out this. Just whack in your gross income and it will work out exactly after tax and national insurance you will have each month and week.

It should give you a better idea of how much you will be taking home.

But your tax free allowance is slightly over £5,000 as deceepool said, after that you pay tax of 22% until april 2008 when the tax rate drops to 20%

:thumb:

Former Member

You would be subject to tax & NI on that salary.

I have worked your monthly tax deduction out to be £73.16 (assuming no payrises & bonuses in the 07/08 tax year) on a gross monthly salary of £869.42

I haven't got my NIC tables to hand but the figure would be around about the same, assuming you won't be paying into an occupational pension. I reckon you would be left with about £725 a month in your hand. Depends whether the role is worth it and if the £725 covers your outgoings.

Hope that helps x

P.S...Dunno how old you are hun, but if you are over 25 and it's a 30hrs + a week job, you could well be entitled to claim working tax credit to top it up...you don't have to have children to claim

Former Member

Try i-resign.co.uk (or .com, i can't remember), it's really good for this sort of thing, it even takes into account student loan things - not that it'll be applicable on yours

Former Member

Joolyknockers wrote: »

P.S...Dunno how old you are hun, but if you are over 25 and it's a 30hrs + a week job, you could well be entitled to claim working tax credit to top it up...you don't have to have children to claim

I've heard about this, was going to look into it. I'm 25 next month and will be working over 30 hours. Do youknow where I can find out about this? NIce one.

And guys I meant 5k, not 15 :yes:

Former Member

VinylVicky wrote: »

I've heard about this, was going to look into it. I'm 25 next month and will be working over 30 hours. Do youknow where I can find out about this? NIce one.

Just contact the HMRC enquiry line, or you can contact CLS Direct on 0845 456 6815 to find out how much you may be entitled to, and if you are eligible for other benefits.

Former Member

You can ring the tax credits helpline on 0845 300 3900 and they will give you a rough figure for your entitlement and send you out the claim pack at the same time. You can only get the claim packs from the helpine these days so you gotta ring them either way LOL.

From what I remember you have had some JSA so remember to reduce your annual income accordingly....at a guess April, May & June will be all be JSA so 12wks @ £46.85 =£562.20 and then July to March 2008 at £869.42. Makes a gross annual income of £7,824

It would be worth bearing in mind that working tax credit is taken into account for housing benefit purposes, so what you gain from tax credits might be whipped off you by the council...I don't think it is on a £1 for £1 basis though.

Former Member

If I remember rightly, I think housing benefit is tapered a lot more to encourage people to get back to work. You can claim WTC before you actually start the work, too, if you intend to take the job and you need help getting off income-based JSA, Income Support or similar.

If you want to know if you're better off taking the job give CLS Direct a call, they'll be able to tell you what you might be able to get and whether you'll lose money from other benefits. On your income you should be eligible for help.

Former Member

Kermit wrote: »

You can claim WTC before you actually start the work, too, if you intend to take the job and you need help getting off income-based JSA, Income Support or similar.

You can submit the WTC claim on the day you start working, but not before. You need to be able to give tax credit office the employers PAYE reference (especially important if you are working for a small business) in order for the claim to go on the system.

Who are CLS?? I haven't heard of them...I've always used and recommended entitledto.com

Former Member

You can get a back to work grant I think, depending on how long you've been on JSA. The housing benefit isn't £1 for £1, I think it's 60% of net earnings above your 'applicable allowance' gets deducted from the applicable amount.

Former Member

been on JSA now since May 15th and was on IS and IB from end of Feb. IS and IB amounted to around 65 pound pw. Would IB and IS be taken into account.
Thank you for your time everyone.

Former Member

depends on if they're taxable or not.

# some Incapacity Benefit payments - not taxable for the first 28 weeks
# some Income Support payments - not taxable if you haven't signed on as unemployed and you're looking for work

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnBenefitsPensionsAndMaintenance/DG_10027059

so I think yours wouldn't be in your circs.

Former Member

In this year's budget, didn't the 10% bracket get abolished?

So 0k-5k is 0%, then 5k-40k is 20% then 40k+ is 40%?

Former Member

It did, but this years budget doens't come in until sometime in 2008, and with it's abolition, the limits all went up.

Former Member

Scary Monster wrote: »

It did, but this years budget doens't come in until sometime in 2008, and with it's abolition, the limits all went up.

The change in tax brackets/rates in the last budget will come into effect on 6th April 2008. The 10% is only being abolished for general income (salarys + taxable benefits in kind, self employed profits, rental income, etc) not savings or dividends income AFAIK

Former Member

Joolyknockers wrote: »

Who are CLS?? I haven't heard of them...I've always used and recommended entitledto.com

Community Legal Services, if the client is entitled to legal aid (if they're on a low income or on a passporting benefit) then they can get advice on debt, welfare benefits, housing law, employment law, etc through the CLS Direct telephone number.

Former Member

Cheers Kermit! Stuck it in my favourites