Have Tax Questions? Ask a Tax Expert for Answers ASAP
Thanks.I'm afraid the PAYE system isn't helping you. PAYE operates on a cumulative basis so in month 1 of the tax year, you are given 1/12th of your personal allowance and the balance is taxed at 20% if it is no more than 1/12th of the basic rate band. If it is more, then the excess will be taxed at 40% or even 45% if 1/12th of the 40% tax band is exceeded.In month two of the tax year, you are given 1/6th of your personal allowance and the balance is taxed at 20% if it is no more than 1/6th of the basic rate band. If it is more, then the excess will be taxed at 40% or even 45% if 1/6th of the 40% tax band is exceeded. In month three, the fraction is 1/4 is used and so on.The large taxable payment of £26,000 you received has effectively pushed you too far into the 40% tax band as it has been included in your P45 figures. What I can say is that as each month passes, your tax deduction will reduce as you are given more of your personal allowance and the basic rate tax band. By the end of the tax year, you should be square as far as tax is concerned.Use the calculators here to compute your next months tax and NIC deductions. Use the calculator here to determine what the 2015/16 tax year end position will be.I hope this helps but let me know if you have any further questions.
You would be cutting off your nose to spite your face if you took a break. It's not as if tax is charged at 100% so if you stop work you will be out of pocket.The fact that you had a large taxable sum paid to you early in the tax year has distorted your tax position but that will gradually rectify itself over the rest of the tax year. You will not pay more tax overall than you would if your total earnings were spread evenly over the tax year.If you did take a break until say 1 October 2015, at the end of that month you would be entitled to 7/12ths of your personal allowance against your earnings to date and you would be paying less tax but that would be because your earnings will have been less.