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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, I am a UK citizen and have just returned to the UK after

Resolved Question:

Hi,
I am a UK citizen and have just returned to the UK after 20 years abroad. I have been offered a job with a £40k salary and wish to know what my tax and NI contributions would be. I understand that it is 40%, this seems really high for such a low income! Also, I will only be earning from June to December in this tax year.
How can I reduce my tax contributions?
I am single in rented accommodation.
Do deductions exist for homes owned abroad?
Thanks!
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me.. is £40k salary for the period Jun to Dec or is it £40k pa?

Many thanks
Customer: replied 2 years ago.

Hi,


 


The 40k is per annum so obviously this year I would fall under the 31k limit. However I would like to know what it would be in a normal year and also my NI contributions and if I can get any further deductions for home ownership etc.


Thanks so much :-)

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your prompt reply...

Let's assume 2014/15 is a normal tax year for this exercise AND THAT you earn £40k in a full tax year... your tax and NI deductions would be as follows:

 

Earnings summaryMonth
Gross pay3,333.33
Tax free allowance833.33
Total taxable2,500.00
Tax due500.00
National insurance deduction320.44
Total deductions820.44
Net earnings2,512.89

 

Earnings summaryFull year
Gross pay40,000.00
Tax free allowance10,000.00
Total taxable30,000.00
Tax due6,000.00
National insurance deduction3,845.28
Total deductions9,845.28
Net earnings30,154.72

 

There are no deductions for home ownership.

 

 

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

 

Customer: replied 2 years ago.

Great, thank you to you for getting back to me so promptly!


 


- So what would happen in this particular tax year (Jan 2014-Dec 2014) if I start my job in June and have not received any earnings in 2014 as yet?


- Also, I have no P45 as I have not worked in the UK (I am a UK citizen) for over 20 years - does this affect anything? (I do have an NIE number). - Do I need to do anything before I start my new job and is the tax applied automatically and is there anything I can do to reduce it?


 


Thanks so much Smile


Hope that you are having a nice evening


Regards,


N


 


 

Expert:  taxadvisor.uk replied 2 years ago.
Thanks for your reply.

In the UK, tax year runs from 6 Apr to 5 Apr and we are in the tax year 2014-15 (6 Apr 2014 to 5 Apr 2015).

Once you get a tax code it would apply for the whole tax year and you would get full year allowance (this tax year the figure is £10k).

Your new employer will complete a form P46 for you and you will get your tax code based on information provided on form P46.

The only way to reduce your tax would be to make contributions into a pension scheme.

You don't have to do anything as such. If you are likely to receive any interest on savings from either a UKsource or from overseas, then you would have to complete a tax return. It would be advisable to register for self assessment and more information on this can be found here

http://www.hmrc.gov.uk/sa/register.htm


I hope this is helpful and answers your question.


Expert:  taxadvisor.uk replied 2 years ago.

I notice you have viewed my response to your further questions on taxation of earnings without P45 etc (</spanCustomerLast Viewed on 28/05/2014 at 19:47).

I hope this is helpful and answers your question.

Just checking to see if you have any issues relating to your question that I may not have addressed.Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

Customer: replied 2 years ago.

Hi again,


 


Sorry, I haven't rated you! I will be happy to do so with an Excellent service.


 


However I do have one last final query, the company want to put me on a 3 month trial paying £2,500 per month without PAYE before going to a fixed contract with PAYE etc. As I previously mentioned, I have not worked in the UK in over 20 years and my last year's taxes have been recorded in Spain. I have not earnt money in this tax year.


 


I wish to know the following:


- Do I need to declare this?


- Would the employer declare it in anyway?


- What tax / NIE would I have to pay?


- How do I go about this?


 


Thanks so much!


 


Great service btw.


 


Have a super day.


 


Warm regards,


 


Niki

Expert:  taxadvisor.uk replied 2 years ago.
Niki, thank you for your reply...

I wish to know the following:


- Do I need to declare this?


[a]
you should declare this fee as income on your tax return under other taxable income.

- Would the employer declare it in anyway?

[a]

Your employer may declare it


- What tax / NIE would I have to pay?

[a]

This income would be added to your earning and other incoem in the tax year and chargeable to income tax at your marginal rate... it would appear from information provided that it would attract tax at 20%

 

As this is casual income (fee) .. it would not attract NI contribution provided it is not deemed part of salary. The period of 3 months could be viewed as consultancy.


- How do I go about this?

[a]

You should view the 3 month period as consultancy on self employed basis before signing a contract.

 

I hope this is helpful.

 

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

 

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thanks so much.


Have a good weekend.


Warm regards,


Niki

Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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