Income Tax - how does it work.

[sh1974]

For many years now I always believed I knew how income tax worked in relation to your tax code but with this latest increase i'm not so sure. Considering my code went from 810L to 944L I was expecting a lot more money than an extra £23.72

 

My understand was that 810L = £8105 that could be earnt before tax and that 944L would mean £9445. A £1340 difference on the year, £111.66 a month.

 

So could someone explain how it works?

[dpick]

No this is your tax free allowance IE you can earn £9445 before tax if you earn more than that you start paying tax at that point the difference would be the amount of tax you would have paid on the £1340 before the allowances were amended I don't know the tax rates now but at 20% rate this would be approx £268 in a year.

 

As in £268 less tax paid in the year.

 

dpick

[sh1974]

Ok, I understand now. Thanks.