Question: I just started working in the UK for the first time and received my first payslip. Another colleague of mine got his second payslip here, from the same company.

We were surprised that in the detail no amount for "Tax" was deducted.

I researched a bit and found that for the tax code [1060L](http://taxaid.org.uk/guides/information/issues-for-employees/employee/form-p46), specified in our payslip, we got some tax free income for a while.

However, since I'm not an English native speaker, I still have some doubts on how it works.

As I understand it:

* I am entitled to 10600£ per year tax free and until I reach that value, I won't pay tax;
* When I do reach 10600£, taxes will be deducted as for everybody else;

Is this correct?

Answer: 
CORRECT ANSWER FOUND!

I'm new to the UK and also started work in September 2015. It also drove me insane I had such a hard time understanding how the taxes worked. After a lot of research, I came upon this thread, and read the whole thing, including the bits in the chat where James, you posted the final excel table.

Then I actually realised HMRC gave a pretty useful tool for tax calculations for a given pay date anytime during a given tax year. There it is: [tax calculations](http://tools.hmrc.gov.uk/hmrctaxcalculator/investigate/Personal+Tax+Calculator/en-GB/Attribute~b3%40Rules_GlobalProceduralRules_doc~global~global/qs%24s54%40Interviews_Screens_xint%24global%24global?user=guest)

And I'm happy to say: the final table was correct! Chiapa, you can check for yourself with this tool. 

To sum up, your taxes are calculated as followed (if you're taxed 20% and allowance is 10,600 per tax year, or 883 per month):

* **cumulative income tax = 0.2\*(income cumulative- tax free cumulative)**
* **income tax paid on month (n) = cumulative income tax on month (n) - cumulative income tax on month (n-1)**

:)
Your payslip should not show tax deductions until you have fully utilised your cumulative personal allowance for the tax year, if you started working somewhere in the middle of the tax year.
example,
Starting date: 01/01/2016
Salary: 2500

Income tax = 20%( £2500 - £7947(883 \*9) ) = 0

£7947 is cumulative personal allowance for 9 months from April, 2015 to Dec, 2015. 

This employee will not pay tax for the entire tax year of 2015/2016 as his total income is only £7500 (3\*£2500), which is below the personal allowance. 
Assume tax has been deducted by mistake from his income, it will be rebated later on. 

Correct me if I made any mistake.