hi my tax code is647l my pay was £1999.08 and i paid £533 is this ok my yearly earnings so far is£31979.15

Asked by ianthorburn2000

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Answered by Richard Salter, IFA in Trowbridge, WILTSHIRE
It appears so. Your code of 647L is the standard code most UK taxpayers are given as it refers directly to the (annual) Personal Allowance which is currently £6,475. This means that the HMRC will regard you as being allowed to have the full £6,475 (the code always drops the last digit for some reason) in the relevant tax year BEFORE income tax is applied to anything else.

The letter L shows that you are getting the Lower rate of tax allowance as this increases to £9,490 for anyone over age 65.

If you have already earned £31,979 by end of Novembers payslip (I assume you have not had your December payslip yet) then in the nine months of the tax year so far you will have earned the equivalent of £3,553 or so gross each month. Over a full tax year you will therefore earn £42,638 or so. As such you are very close to being a higher rate tax payer.

However your pay appears to be being pitched to just avoid this. This is because your annual earnings of £42,638 less the personal allowance of £6,475 means that 'only' £36,163 is liable to basic rate tax - the Higher rate threshold being applied from £37,400 of TAXABLE income. You only have £36,163 or so of TAXABLE income so your code is right and the HMRC can instruct your employer to apply the full 647L code and thus to take only basic rate tax from you.

£533 of tax is just about twenty per cent of your monthly pay so seems pretty reliable. Hope this helps
| 12.16.10 @ 17:26
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$commenter.renderDisplayableName() — {comment} | 08.22.17 @ 22:28
Answered by D C, IFA in Bristol, DEVON
If, though, you receive an annual bonus this tax year, you may well fall into the higher rate tax band. The bonus is treated as income, and if your total income is above £43,875 this year, then however much lies above that figure will be taxed at 40% (you could use pension contributions to avoid this, if you wished).

There will be additional tax to pay if you receive 'benefits in kind' - such as a company car which is available for personal use. Each benefit has a 'taxable value'. This is not the cost of the car, but is a figure which would be added to your other income for the purposes of calculating your overall tax liability. | 12.16.10 @ 18:33
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$commenter.renderDisplayableName() — {comment} | 08.22.17 @ 22:28
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Answered by

Richard Salter
Richard Salter, IFA in Trowbridge, WILTSHIRE

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