1. Home
  2. UK Finance Discussions
  3. Query: operation of BR tax code

Query: operation of BR tax code

I have a part-time job which pays 425 quid a month gross and taxes me using 503T, so I pay a tiny amount of tax at the starting rate of 10%.

I have recently started a second part-time job using code BR, which taxes me at 22% on all pay (I think).

It seems to me that I am missing out on the majority of the 10% band, and am consequently overtaxed on some of the 2nd job's pay.

I've just had a notice of coding for 2007/08 which proposes to reduce my primary tax code to 483T, giving as the reason that both employers will tax me at 10% on the first 2150 quid pa. This seems wrong if my understanding of the operation of the BR code is right. Or am I missing something?

Matti

Reply to
Matti Lamprhey
Loading thread data ...

Things get a bit complicated when you have several sources of income which, in total, give you a tax liability but no single source gets you onto the basic rate. The tax man has to juggle the codes to allocate the allowances in a way which results in the right amount of tax being paid.

Presumably, the code for the second job will longer be BR but will, instead, be zero. This means that you will pay 10% on the first 2150 and 22% thereafter. But you are using some of your 10% allowance up on the first job. In the absence of any code adjustment, you would be paying 10% on too much, and 22% on too little - resulting in an underpayment of tax. The restriction in your code is designed to correct this.

As far as the current tax year is concerned, you are paying too much tax because *some* of your second income should be taxed at 10% rather than 22%. You will have to fill in a tax return at the end of the tax year, and reclaim the overpaid tax.

Reply to
Roger Mills

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.