How much do you have to earn before you pay 40% tax

northernsal
northernsal Posts: 50 Forumite
in Cutting tax
Hi there,

Can someone please explain the tax boundaires. How much do you have to earn before you have to pay 40% tax, alos what is the other boundary for twenty percent tax.

I have a long commute to work but am not self employed, would I be eligble for any tax allowances for journeys etc.

Thanks in advance

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Comments

  • Riq
    Riq Posts: 10,430 Forumite
    Your journey to work is not tax allowable.

    The boundaries for this tax year are

    £1-£2,230 = 10%
    £2,231-£34,600 = 22%
    £34,601+ = 40%

    This all starts after your £5,225 has been used up of course.
    "I'm not from around here, I have my own customs"
    For confirmation: No, I'm not a 40 year old woman, I'm a 26 year old bloke!
  • northernsal
    northernsal Posts: 50 Forumite
    This all starts after your £5,225 has been used up of course.[/quote]


    :confused: Hi Riq,

    WHat do you mean by this?
  • Riq
    Riq Posts: 10,430 Forumite
    You have a personal taxfree allowance of £5,225 which you can earn before you pay any income tax on it.

    Sorry, I am not the best person at explaining things. Thankfully I am not a teacher! :D
    "I'm not from around here, I have my own customs"
    For confirmation: No, I'm not a 40 year old woman, I'm a 26 year old bloke!
  • jem16
    jem16 Posts: 19,397 Forumite
    Name Dropper First Post First Anniversary Photogenic
    northernsal wrote: »
    This all starts after your £5,225 has been used up of course.


    :confused: Hi Riq,

    WHat do you mean by this?


    Basically it means that assuming tax code of 522L you can earn £39,825 before you enter higher rate tax. ( £34,600 + £5225 of personal allowance).
  • CarolynH
    CarolynH Posts: 570 Forumite
    jem16 wrote: »
    Basically it means that assuming tax code of 522L you can earn £39,825 before you enter higher rate tax. ( £34,600 + £5225 of personal allowance).


    And you'll only pay 40% tax on earnings above this level - it seems to be a common misconception that once you hit the 40% level you pay 40% of everything.
    :D Make a list of important things to do today. At the top, put 'eat chocolate'. Now, you'll get at least one thing done today. :D
  • Zebedee69
    Zebedee69 Posts: 1,034 Forumite
    Dont forget to keep your reciepts (Grrrr im going through mine right now!).............
  • frog_bounce
    frog_bounce Posts: 149 Forumite
    Hi i have a tax code of 233L/1 and have a company car.
    What does this mean for me?
  • jem16
    jem16 Posts: 19,397 Forumite
    Name Dropper First Post First Anniversary Photogenic
    It means you have £2330 of personal tax-free allowances. probably because of your company car which is a taxable benefit so it reduces your allowances.
  • frog_bounce
    frog_bounce Posts: 149 Forumite
    i dont even want a company car but need it for my job!
  • bigstevex
    bigstevex Posts: 913 Forumite
    Name Dropper First Anniversary Combo Breaker First Post
    Company cars lower your free tax limit by 3K, soo...
    correct me if i'm wrong but...

    0-2330 - tax free
    2330 - ~4500 - 10%
    4500 - ~36900 - 22%
    anymore is 40%

    Those figures are approx! also as of april this year (i think) there are only 2 tax bands of 20% and 40%
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