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: 
I've *never* had consistent pay for the first couple of months in a new job (UK). Typically there's no tax taken in the first month, most of the first month's tax in the second, and by the third month things have settled down. Although using up the personal allowance over the first few months is sometimes seen, I'm more used to seeing two months of unusual pay then tax taken at a rate to spread the remaining allowance evenly over the rest of the year.
Your pay may change again by more than you expect at the new tax year. In particular as the same personal allowance is spread over more months, your net pay may go down in April (assuming you didn't have a job for the first few months of this tax year)\*.

I suggest two things:

* You figure out roughly how much tax you should have paid in the first month, and make sure to not spend that as your second month's pay may be short a similar amount.
* At the end of the tax year you compare your P60 to an independent figure (actually the P60 can be a couple of months after the end of the tax year, but you can also use the year-to-date figures on your March payslip).

There are many online tax calculators to help you calculate your expected values. I won't recommend one as I haven't used any -- I tend to throw together a spreadsheet from HMRCs allowances data. 

If you've had another job in this tax year, you'll need to take into account the figures on the P45 from that job. If you haven't received a P45 yet, your final payslip should give you that information. It's also possible you'll have to take into account any benefits you've received.

\*A bit more detail of how pay can go down in April. You're on a salary of £12,000 PA and you start a job at the beginning of June (having not previously worked this tax year). You therefore earn £10,000 over the course of the tax year, which is less than the personal allowance so you pay no income tax. Next year your salary is unchanged, but you work the entire year, thus over the course of the year you'll be taxed on (£12,000-£10,600=£1400) at 20%. That's a tax bill of £280 over the year, which is likely to be deducted in the form of around £23 per month -- your monthly pay goes down by £23. 

A few caveats to this: 

* I've ignored NI and any pension contributions.
* The personal allowance normally goes up a little.
* I could easily work a different example with a higher salary (£24,000 salary, start in November, pay goes down £223pm in April as no tax is due in the starting year).
	+ Remember the personal allowance is annual. (NI works completely differently, on a weekly basis, but may be regarded as another tax).

**tl;dr** It will fluctuate at first, the year-end figures matter the most.
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.