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If you have regular part time work which is not seasonal, then you will be brought into the tax system as any other employee. Your tax free personal allowance will be given to you as a deduction against your earnings. Therefore if you are paid weekly then your allowance is divided by 52 weeks, or if you are paid monthly then your allowance is divided by 12 months.
For example »    

The most common situations, which may result in a tax over or underpayment is when you start or leave a job part way through a tax year. In these circumstances you may not receive your full tax free personal allowance for the entire tax year, but only for the weeks you have worked.

For example »    

In order to avoid the above scenario STS recommends you should follow these basic steps

1. If you start a new job during term time, always complete and submit form P46 to your employer. This form is only relevant if this is your first job.

If you have worked before in the same tax year then you need to give your new employer a form P45 that you would have received when you left your previous job.

2. When you leave a job always ensure you receive a form P45. One part should be sent to the Inland Revenue, one part should be kept by you and the other handed to your new employer when you start a new job. This form will be required by you as it will contain the relevant details you need to obtain any tax rebate.

If you earn £100 per week, then your tax free allowance will be given as follows;
2006/07 tax free allowance
£5,035/52 weeks = £96.82 per week.
You will therefore be taxed on
£3.18 per week (£100 - £96.82)

You started your job on 6 October 2006 and you earn £500 per month, your tax free allowance will be given as follows: - 2006/07, £5,035/12 months = £419.58 per month. You will therefore be taxed on £80.42 (£500 - £419.58) per month. This may seem unfair, as your earnings for the remainder of the tax year 2006/07 are only £3,000 (from 6 October 2006 to 5 April 2007), which is under the annual tax free amount of £5,035! You will therefore need to claim a tax rebate.


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