Tax can be a rather confusing subject, particularly when you’re not earning a regular fixed income or if you are unfamiliar with the UK tax system. We have gathered some popular questions from our Syfters on taxation and hopefully this will draw some clarity on your income tax and help you to understand your payslips a bit better.
Why am I getting taxed so much?
The amount you are taxed is all down to your tax code. Your tax code is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension. Her Majesty’s Revenue and Customs (HMRC) will tell them which code to use to collect the right tax.
To see the full breakdown of tax codes, or understand what tax code you are on. You can visit https://www.gov.uk/tax-codes for more details.
If you believe you are being taxed incorrectly, you must contact HMRC to see if your code is correct, we cannot do this for you.
I don’t think I earn enough to be getting taxed.
Have no fear! You will still have to pay tax on your income, however, the government will give the money back via rebates. You may be eligible for a rebate if you:
- are employed and had too much tax taken from your pay
- have stopped work
- sent a tax return and paid too much tax
- have paid too much tax on pension payments
- bought a life annuity
So, when will you get your hard-earned money back? This depends on whether you are awaiting a bank transfer or a cheque. For a bank transfer, you must allow up to 5 working days. This must be to a UK bank account. If you are awaiting a cheque, it could take up to 5 weeks.
You can find more information regarding rebates here: https://www.gov.uk/claim-tax-refund.
I’m a student, why am I paying tax?
Regardless of whether you are in full-time education or not, as a student you still have to pay taxes. Everyone must pay tax to contribute to the well-being of the state. Your income tax will go towards pensions, housing benefits, income support, tax credits and child allowances. However, students are entitled to other benefits such as council tax exemptions and discounts in retail stores and select supermarkets.
If you are repaying a student loan, that will be automatically deducted from your payslip. If there are any issues with this, please contact HMRC directly.
The company I work for is taking too much money from me for tax.
Your company’s payroll manager has no control over how much tax you pay as it is all controlled by HMRC. Your payroll manager simply provides the documents to HMRC containing your hours and earnings. Please note, if you need any changes to your tax code, you must go via HMRC. Most tax-related queries cannot be solved by your payroll manager.
I’m from the EU. Do I need to pay tax in the UK?
EU nationals would need to pay tax in the UK, and generally the same rules as above apply. EU Nationals also need a National Insurance (NI) number to work in the UK, find out more here https://www.gov.uk/apply-national-insurance-number.
I work for more than one company, how much tax do I pay?
If you are working more than one job, it’s important to ensure that you’re paying the correct amount of tax. To avoid over or underpaying tax, you need to declare your second job to HMRC and check your tax codes for both jobs to make sure they are correct. If you have more than one job, you’ll have more than one tax code.
If you’re a Syfter and would like to speak to payroll, the best way to get in touch is via email on email@example.com.