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Posted Tue, 12 Jul 2022 01:53:09 GMT by TC G
Let us say you have been unemployed and start working in the middle of a fiscal year, say in September, for a salary of £60,000 per year, which is within the 40% tax bracket. However, because you started in the middle of the fiscal year, you will only make £30k, or half of your usual salary, during that year. Will you pay taxes based on a 40% or 20% rate in that situation?
Posted Wed, 13 Jul 2022 10:59:53 GMT by HMRC Admin 17

You would only be due to pay 20% tax on the Income above the Personal Allowance.

Thank you.
Posted Wed, 13 Jul 2022 11:07:09 GMT by TC G
Does that imply that only 20% tax will be deducted from my first paycheck by the employer, or that 40% tax will be deducted every month and refunded to me after the fiscal year ends in April 2023?
Posted Fri, 15 Jul 2022 10:16:33 GMT by HMRC Admin 20
Hi TC G,

It would depend on the tax code being used, if you are on a cumulative tax code, which review your tax back to the start of the year, you will not pay 40% tax.
If you are on an emergency tax code, you will be paying 40% tax and this would be refunded at the end of the year if your tax code is not changed.

Thank you.

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