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40% tax rate...???

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By (user no longer on site) OP   
over a year ago

Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???

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By (user no longer on site)
over a year ago

I think its every thing over the threshold. I'm interested in this as I could be in same boat at some point this year.

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By *iewMan
Forum Mod
over a year ago

Angus & Findhorn

it is 40% of your entire salary

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By *iewMan
Forum Mod
over a year ago

Angus & Findhorn

same tax allowance, you can earn a certain amount, the same as the lower, once that is exceeded... 40%

and savings etc

I am sure, I hope I am right

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By *abioMan
over a year ago

Newcastle and Gateshead


"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"

oooh... my wheelhouse....

single persons tax allowence for this year is 9440....

20% tax band is then between 0 and 32010

you don't start paying on the 40% until you reach 41,450...

you only pay 40% on the income over 41450

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By *plpxp2Couple
over a year ago

Middlesbrough

Tax free allowance: £9,440

Basic rate tax: £0-£32,010

Higher rate: £32,011- £150,000

One in 6 will be paying the higher rate by the end of this Government

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By *iewMan
Forum Mod
over a year ago

Angus & Findhorn

I have just learned sumit..

cheers

I am currently making a huge decision over something and that learning, just helped

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By (user no longer on site) OP   
over a year ago

[Removed by poster at 01/04/13 13:12:42]

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By *isscheekychopsWoman
over a year ago

The land of grey peas and bacon

wooohooo I still pay 20% lol

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By *exy lady redWoman
over a year ago

Sheffield

[Removed by poster at 01/04/13 13:14:12]

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By (user no longer on site)
over a year ago

So am I right saying my car allowance paid into my salary is classes as income? Therefore I get taxed on it? That's just screwed me over at work if that's true

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By *iss_tressWoman
over a year ago

London


"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"

Dream on...off everything!

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By *isscheekychopsWoman
over a year ago

The land of grey peas and bacon


"So am I right saying my car allowance paid into my salary is classes as income? Therefore I get taxed on it? That's just screwed me over at work if that's true "

If you get a car allowance, the whole allowance is taxable income, but you can offset against tax the actual costs of running your own car (or the Inland Revenue's standard allowances for running your own car, whichever is better for you).

If you get a company car, the Inland Revenue calculated taxable benefit is subject to tax as if it's income.

Your circumstances will determine whether it's better to take the company car or not, but if the allowance is a fair one it's probably worth having the car if you do LOADS of personal mileage, but not worth it if you do hardly any personal mileage.

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By *exy lady redWoman
over a year ago

Sheffield

Hi, financial adviser here think of it like a bucket you are pouring sand into. The first £9440 is tax free. Then the next £32,010 is taxed at 20%. Therefore you earnings poured into said bucket need to be £41,450 before any excess of this is taxed at 40%

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By *otlovefun42Couple
over a year ago

Costa Blanca Spain...


"it is 40% of your entire salary"

No it's not. It's 40% of everything above the threshold.

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By (user no longer on site) OP   
over a year ago


"Hi, financial adviser here think of it like a bucket you are pouring sand into. The first £9440 is tax free. Then the next £32,010 is taxed at 20%. Therefore you earnings poured into said bucket need to be £41,450 before any excess of this is taxed at 40% "

Pwoarrr... A good figure, good with figures.... Can I put you on my bucket list....

Thanks All, I feel somewhat reassured....

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By *iewMan
Forum Mod
over a year ago

Angus & Findhorn


"it is 40% of your entire salary

No it's not. It's 40% of everything above the threshold."

ta

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By (user no longer on site)
over a year ago

[Removed by poster at 01/04/13 13:35:45]

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By *ollie_JCouple
over a year ago

London

And you will have to pay extra tax via self assessment on extra incomes from dividends and savings at 40% as well

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By *eal_Dick_TurpinMan
over a year ago

Exeter


"wooohooo I still pay 20% lol "

while you are correct, it is also misleading. (and errors in the following about tax bands etc are deliberate for the purposes of simplicity)

1/ say you lose 20% of your income to tax... you're down to 80% of your income

that's great, but you need to spend money to live, and everything you buy is taxed too, even if it is "only" 20% VAT

2/ so with the 80% of your income left you buy something VATable at 20%, suddenly you're down to 64% of your income going on the goods you purchased, and the other 36% being tax.

3/ In the case of fuel...

xhttp://www.petrolprices.com/the-price-of-fuel.html

assuming diesel at 137.5 a litre...

56.97 is the fuel itself, shipping costs, profit margins etc, and the remaining 80.53 is taxes

but if the 137.5 you actually pay is paid out of your income after a 20% tax cut, in gross salary terms that litre is costing you 171.875 pence a litre of your gross, eg you hourly rate as advertised in a jobcentre ad..

So if 171.875 pence of your gross earnings goes to buy a litre of diesel that costs 56.97 pence a litre, then the ACTUAL TAX RATE is 300.69%

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By (user no longer on site)
over a year ago


"it is 40% of your entire salary"

The Tax Allowances for 2013/14 are

20% £0 to £32,010

40% £32,011 to £150,00

45% Over £150,000

You will not pay 40% on all your salary, but only the salary over £34,370

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By (user no longer on site)
over a year ago


"Tax free allowance: £9,440

Basic rate tax: £0-£32,010

Higher rate: £32,011- £150,000

One in 6 will be paying the higher rate by the end of this Government "

Paid higher rate with the previous Government

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By *abioMan
over a year ago

Newcastle and Gateshead


"it is 40% of your entire salary

The Tax Allowances for 2013/14 are

20% £0 to £32,010

40% £32,011 to £150,00

45% Over £150,000

You will not pay 40% on all your salary, but only the salary over £34,370"

that is slightly incorrect...

you have a single persons tax allowance of 9440..... so you need to add that to the 32010... which is where the figure of £41,450 comes from....

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By (user no longer on site)
over a year ago


"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"

40% of that's which is over the limit ...there are various ways to avoid it though

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By (user no longer on site)
over a year ago

I am on Paye and get my main bonus in month 1 and a further bonus in month 12, so at the end and beginning of the year, my wages are all over the place. I did not realise till reading this that I had breached the 40% mark. I thought it was closer to £55k and I was safe

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By (user no longer on site)
over a year ago

I actually pay MORE in fuel duty than I pay in Income tax.

Now that DOES bring things into focus.....

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By *ighly ProfessionalMan
over a year ago

peterborough

Hi im a director of payroll services for a very large european company. Its interesting to see the different answers people have given here , some right some well off the mark. Full credit though goes to ..... Fabio Totally correct well layed out and explained. Oh did any mention that the higher rate is only 45% this tax year ?

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By (user no longer on site)
over a year ago

I don't think J has ever paid a penny in tax in the last 10yrs.

M

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