tax codes

[ft101]

Hello

Is this statement correct?

your yearly tax – free allowance is spread out across the year. So if you are on a standard 543L code, you have £5435 annual tax-free allowance. This is then split into 12 or 52 depending on how you are paid – weekly or monthly, so that each time you are paid, the first £453 per month/£104 per week is tax-free.

I was under the impression I could earn upto the tax code limit then start paying tax, even if i hit that limit in one payment?

thanks

[Sockpuppet]

Hello

Is this statement correct?

your yearly tax – free allowance is spread out across the year. So if you are on a standard 543L code, you have £5435 annual tax-free allowance. This is then split into 12 or 52 depending on how you are paid – weekly or monthly, so that each time you are paid, the first £453 per month/£104 per week is tax-free.

I was under the impression I could earn upto the tax code limit then start paying tax, even if i hit that limit in one payment?

Yes. But normal people don't get paid like that and the advice is based on normal people.

Also only applies to people who are directors and pay tax based on cumulative amounts not based on per week/month amounts.

[jigsaw]

My take on this is, as far as I know, the basic tax allowance is spread over 12 months yes. But if you only started work in August say, (and had no income before that from April) then you would be allowed your tax free allowances for April to August - thus allowing you to earn a bit more when you first start your job.

By the way, I read somewhere the 543L code is going to be a 603L code from September. The basic personal tax allowance is being increased from £5435 to £6035, prompted by the 10p tax rate fiasco of the current, incompetent government.

[pmeswani]

Yes. But normal people don't get paid like that and the advice is based on normal people.

Also only applies to people who are directors and pay tax based on cumulative amounts not based on per week/month amounts.

Nobody has ever called me normal before.

I taken the route of paying myself on a monthly basis based on the suggestion posted by the OP. Makes it easier for myself as I have no idea where I am going to be after the current contract is up.... may end up going back to permie.... so I will be saving myself the hassle falling foul too soon.

[LisaContractorUmbrella]

Hello

Is this statement correct?

your yearly tax – free allowance is spread out across the year. So if you are on a standard 543L code, you have £5435 annual tax-free allowance. This is then split into 12 or 52 depending on how you are paid – weekly or monthly, so that each time you are paid, the first £453 per month/£104 per week is tax-free.

I was under the impression I could earn upto the tax code limit then start paying tax, even if i hit that limit in one payment?

thanks

This applies to someone who is paying tax through PAYE (Pay As You Earn).