just got a letter through the post from HMRC saying. my tax code from the 6 april 13 to 5 april 14 is changing from 944L to 954L... what does this mean? will i pay more tax? this letter dosent really explain alot
You won't pay tax on the first £9540 earned where has previously you wouldn't have paid tax on the first £9440 earned. an increase in personel tax allowance of £100. Divide £9540 x 52 or 12 depending if you get paid weekly or monthly and it will give the weekly or monthly allowance before you pay tax on your wages. So 9540 x 52 = £183 per week before tax roughly, then if you are under £40k earnings you pay 20p in the £ earned. Plus national insurance contributions that are calculated on a sliding scale.
Last year your tax free allowance was 9440. This year it is 9540. Simples. Should reach the ten grand mark in a couple of years
The last bit is no longer completely true.it's this.. National Insurance is calculated on gross earnings (before tax or pension deductions) above the earnings threshold. For 2013/14 the National Insurance threshold is £149 a week or £7,750 a year. If you earn above the threshold you pay 12% of your earnings between £7,750 and £41,450 Anything you earn above £41,450 a year, you pay National Insurance at 2% If your earnings are below the earnings threshold you pay no National Insurance contributions You still build up rights to benefits, provided you earn £5,668 a year or more up to the lower earnings limit. This is done through National Insurance credits. I read it like this... if you earn between £7,750 and £41.450 you pay 12% on your total earnings over £7.750 per year or 7750 divided by 52 or 12. gives you the amount before you pay national insurance weekly or monthly . so our allowance on national insurance weekly is roughly £149 before we pay ni at 12% on the remaining total before tax and pension contributions are taken off! I could be wrong. that is how I read it.
