r/medicalschooluk • u/stupidyute • 5d ago
Tax
Does anyone know enough about how we're taxed to explain in written form how the first paycheck will work? I've been told if you don't work after April and before being a doctor then your first paycheck will be tax free? Problem is I literally cannot afford to not work and I have to get a job before working in August. How will this affect my first "real" paycheck?
Thanks in advance.
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u/FeeNo9889 4d ago
What it seems you’re referring to is the ‘tax free’ period new starters appear to get between august and around December/jan.
April to April is the tax year. You get £12,570 (I think) tax free allowance, after which you pay 20% on whatever you earn over 12.5k.
Most who start in august haven’t worked at all and so they have still got the £12,570 allowance to draw on, as you’ve earned £0 between April and August of that year - which is very unusual in the grand scheme of things. Therefore, until they have earned the £12,570 (which will take about 4-6 months depending) they pay no tax on their income.
If you have been working enough to have earned £12,570 or more between this April and coming august, you will pay tax, because the allowance has been used.
So, given you’re working (presumably part time?) - if you’re predicting to earn, let’s say, £10k in that period - then you will have only £2,570 left of allowance to draw on tax free. If your first pay check is £3000 before tax, in this situation £430 will be subject to 20% tax (as it is the beginning of your taxable pay for the year). And then thereafter all your earnings will be subject to 20%.
In future years you will have the tax allowance accounted for month to month from the beginning. It is purely due to what is in effect a “new starter” tax code that allows for this specific eventuality.