Income Tax
The tax year runs from 6 April to 5 April of the following year. Everyone, including students’ are liable to pay tax if they earn, from all sources, in a tax year, more than their Personal Allowance. The government determines the Personal Allowance and the rates of tax each year in the budget.
For the tax year 6 April 2011 to 5 April 2012 the rates are as follows:
Personal Allowance (PA) £7,475 pa: anything above that is taxed at 20% up to £35,000, from £35,001 to £150,000 you will be taxed at 40%.
Many other details such as allowances for parents and higher rate bands can be obtained from the HMRC website. The Inland Revenuewebsite is specifically about students.
Tax Codes: Your tax code is related to the amount of tax free income you can earn and hence to your Personal Allowance. For most of our employees it will be their Personal Allowance with the last number removed and replaced with a letter i.e. 747L.
If your code is BR then you are being taxed at the Basic Rate of 20% on all your income and you are not receiving any allowances. This could be because you are using your allowances against some other income or because the tax office is not sure whether you have been employed previously in this
tax year.
If your code has an M1/W1 after it, then this gives you your Personal Allowances but does not adjust your tax to account for previous income received and tax paid in previous employment in this tax year.
Inland Revenue: If, for any reason, the Inland Revenue needs to adjust the amount of tax you are paying they will achieve this by changing your code and sending the new details both to you and to us. We cannot influence this process and we are obliged to use the codes provided by the Inland Revenue. Your tax code is a matter between you and the Inland Revenue and if you want to discuss any aspect of this topic then please contacts them.
