Tax calculation AN1 UK
This question is aimed at UK graduates who started in finance/M&A straight away
joining an M&A shop for AN1 after graduating. Starting in Aug-Sep. Salary in line with street. Wondering whether you normally get a tax refund in April at the end of the tax year? Because gov taxes you per month as if you made your monthly earnings the whole financial year - but you joined a few months into the financial year. Should you get some money back? Did any of you get money back assuming you graduated in that financial year? How much was it if so?
Based on the most helpful WSO content, if you start working in M&A as an Analyst 1 (AN1) in the UK in August or September, you may indeed be eligible for a tax refund at the end of the financial year. Here's why:
UK Tax System: The UK tax system calculates your income tax on an annual basis but deducts it monthly through PAYE (Pay As You Earn). When you start mid-financial year, the system initially assumes you'll earn your monthly salary for the entire year, leading to higher tax deductions in those initial months.
Tax Refund: Since you only worked part of the financial year, your total earnings for that year will be lower than what the system initially estimated. This discrepancy often results in overpayment of taxes, which can be refunded after the tax year ends (April 5th in the UK).
How Much?: The exact refund amount depends on:
Claiming the Refund: HMRC (Her Majesty's Revenue and Customs) usually adjusts this automatically. If they don't, you can contact them or check your tax account online to request a refund.
Many WSO users in similar situations have reported receiving refunds, but the amounts vary widely based on individual circumstances. If you're unsure, consulting a tax advisor or using an online tax calculator can help estimate your potential refund.
Sources: UK Student loan advice - To pay or not to pay, Working In Big 4 Audit in London, I cant save money, https://www.wallstreetoasis.com/forum/investment-banking/investment-banking-in-the-uk-an-overview?customgpt=1, 20 Most Frequently Asked Questions - London Edition
I'm not sure about when exactly, but you will definitely get refunded at some point.
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