Norwegian tax
Dutch taxfrequently asked questions
We will continue to add to this section as common questions arise.
What does my tax code mean?
Your tax code represent the amount you can earn before paying any tax. A tax code of 647L means that you can earn £6,475 before paying any tax.
This amount is known as your Personal Allowance.
The tax code can change because of many reasons such as pension payments, expenses allowances and benefits received. Employees receive a Notice of Coding from the Inland Revenue showing how their code is calculated, but the employer only sees the bottom line figure - not the detail.
What are the tax rates in the UK?
For the year to 5 April 2010, Basic rate tax is charged at 20% on the first £37,400 of taxable income. Income above this level is taxed at 40%, except for dividends which are taxed at a maximum of 32.5%.
The level of taxable income is after deducting your personal allowance.
Employees have to pay National Insurance at 11% on all earnings over £411 per month up to a maximum of £3,657 per month plus 1% on all earning above that amount. Some employees can be exempt from National Insurance, but you need to have the appropriate documentation from the Inland Revenue to prove this.
Company Directors have slightly different rules, but the totals are the same.
How does the tax system work?
The system assumes your salary for the year to date reflects your income for the entire year, and you pay tax at the appropriate tax bands (20% or 40%) based on appropriate assumption.
For example: if you are paid £3,000 per month gross then all your income will be taxed at 20%, as your annual income is within the threshold before you pay higher rates.
Using the above example, you receive a bonus in Month 2 which means that your gross pay for that month is £5,000.
Your total for the two months is £8,000, which equates to £48,000 per annum. After deduction of your personal allowance, this puts you into the higher rate, and some of your bonus is taxed at 40%.
Why is 6th April the start of the tax year?
In the Christian calendar, Lady Day is the traditional name of the Feast of the Annunciation of the Blessed Virgin (25 March) and the first of the four traditional Irish and English quarter days. It was also the start of the legal year.
In 1752 when, following the move from the Julian Calendar to the Gregorian Calendar, 1 January became the start of the year. The tax year changed to reflect the 'lost' days of the calendar change,and moved to 6 April.
And the UK tax law is still based on events of over 250 years ago.
The relevant legislation is contained in provision 6 of the Times of Payment of Rents, Annuities, & c. of the Calendar (New Style) Act 1750.
Why has my monthly tax payment (and net salary) changed?<
If you earn more that about £3,700 each month then you will be a higher rate tax-payer, and the following example will not apply.
Following on from the earlier example where there is a bonus paid in one month, lets look at the detailed calculation (which ignores National Insurance) and assuming a tax code of 600L - personal allowances of £6,000 - and a higher rate threshold of £36,000 for simplicity:
| Item | April | May | June | July | |
|---|---|---|---|---|---|
| A | Gross pay | £3,000 | £5,000 | £3,000 | £3,000 |
| Cumulative gross | £3,000 | £8,000 | £11,000 | £14,000 | |
| Personal Allowance (£6,000 per annum) | £500 | £1,000 | £1,500 | £2,000 | |
| B | Taxable income YTD (Cum gross less personal allowance) | £2,500 | £7,000 | £9,500 | £12,000 |
| C | Basic rate threshold YTD (£36,000 per annum) | £3,000 | £6,000 | £9,000 | £12,000 |
| D | Tax at basic rate (20% of lower of "B" and "C") | £500 | £1,200 | £1,800 | £2,400 |
| E | Tax at higher rate (40% of excess of "B" over "C") | Nil | £400 | £200 | Nil |
| Total cum tax liability ("D" + "E") | £500 | £1,600 | £2,000 | £2,400 | |
| F | Tax for this month | £500 | £1,100 | £400 | £400 |
| Net pay this month ("A" - "F") | £2,500 | £3,900 | £2,600 | £2,600 |
What are benefits in kind?
Any expenses paid by your employers can be benefits in kind, which are taxable. Examples are BUPA, mileage payments and subsistence payments. These are reported at the end of the year by your employer on form P11D and a copy of this should be sent to you for your tax return. The benefits are then normally included in your coding notice in subsequent years, reducing your personal allowance, and collecting the tax through each payslip.
Senergy employees will receive an abbreviated P11d in June of each year showing medical insurance and life cover paid on their behalf by the company.
The Benefits are normally adjusted in your tax code so that BUPA payments of £700pa would reduce your allowances by £700 and hence your tax code by 70.
I work in Norway, what do I have to do about tax returns?
If you have been allocated a D-Number then you will have to prepare a Norwegian Tax Return. If you have been working in Norway at any time, you may still have a liability for Norwegian tax. In either of these circumstances, please contact us for individual advice. We prepare Norwegian Tax Returns for a large number of individuals every year.
Senergy Group employees receive a 20% discount on the preparation of a Norwegian Tax Return. Just contact Sue.
I have a UK tax return to prepare, can you help?
Absolutely.
As a firm of Chartered Accountants based in Scotland we can help you ensure that you claim the maximum allowances in the UK, and we can calculate your tax liabilities using our state of the art computer programs to prepare and submit electronic tax returns straight into the Inland Revenue computers.
You work hard enough throughout the year, delegate the Tax Return to us and see how easy we make it.
Senergy Group employees receive a 20% discount on the preparation of a UK Tax Return. Just contact Sue.