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Income Tax

Deductions for Income Tax are operated under the Pay As You Earn (PAYE) Scheme

Your tax code determines the amount of earnings that can be paid before the deduction of income tax.  For the tax year 2017-2018 the standard personal allowances are £11,500.00.  This is represented by a tax code of 1150L.  It does not mean that you do not pay tax until you have earned £11,500.00 but this amount is divided into 12 monthly amounts of £958.33 per month.  This means that in April (tax month1) you may earn £958.33 before tax.  In May (tax month 2) you may earn £1,916.67 (2 x £958.33) in the tax year before paying tax.  This continues through the year until march (tax month 12) when you may earn £11,500 (12 x £958.33) before paying tax.

A tax code of BR means that you are paying tax on all your earnings at the basic rate of tax which is currently 20%.

A tax code of 0T means that you have used up all of your allowances or you have started a new job and your employer doesn't have the details they need to give you a tax code.

A tax code of D0 means that you are paying tax on all your earnings at the higher rate of tax which is currently 40%.

A tax code of D1 means that you are paying tax on all your earnings at the additional rate of tax which is currently 45%.

Income tax is banded depending on your earnings.  The bandings for the current year (2017/2018) are:

 

Percentage Rate Tax Band Payable on earnings from: Payable on earnings to:
20% Basic rate £0.00 £33,500.00
40% Higher rate £33,500 £150,000.00
45% Additional rate  Over £150,000.00

You should satisfy yourself that the tax code that we have been given by HM Revenue & Customs (HMRC) is correct.  If you have any concerns about the tax code you should contact HMRC direct.  Their telephone number is 0300 200 3300.

There is useful information on the HMRC website

In all communications with HMRC you should quote the University's tax reference number; 080/MDCM300 and your national insurance number.

Please note: The Payroll team cannot make telephone calls to HMRC on your behalf.  HMRC will not discuss your personal tax affairs with a third party, including your employer.

 

P60

The income tax form P60 is a statement of your taxable earnings and tax paid during the financial year.  It is issued to employees who were in employment at 5th April.  Staff who have left employment during the year will have been issued with a P45 and, therefore, a P60 will not be issued.  Please note that the taxable pay shown will not be your annual salary at the end of the year neither is it likely to be your gross pay earned during the year.  Taxable pay is your earnings less any pension contributions, including AVCs, and any other salary sacrifice reduction including child care vouchers, car park under the salary sacrifice scheme and Cycle2Work deductions. 

Keep this form in a safe place as you will need it should you be required to complete a self-assessment tax return at the end of the tax year.

 

P11D

The income tax form P11D is a statement of benefits provided to an employee which have not been taxed at source. 

 

Article last updated: Wednesday, August 2, 2017

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