We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Taxing Question - how does the upper tax bracket for income work?
goldbyron
Posts: 790 Forumite
in Cutting tax
My basic pay is £34k with £2k annual bonus (paid June and Dec). I have been undertaking additional work within the local authority in which I am employed and have a final additional claim to make for this tax year. My salary for the year will be taken over the upper tax bracket come March anyway just with my normal monthly payments. I am not clear on how the upper tax bracket works. Would it be foolish to make this claim before the tax year ends as I may have to pay more tax on it? Would I see a drastic reduction in my pay in March in terms of the additional money?
Alternatively I could claim in April but my tax will still top the upper bracket if I continue to gain the additional work. As this isn’t my basic how would payroll ensure I received a stable amount of income all year if the total annual amount can not be foreseen? Will I just get a nasty tax bill at the end…. Any advice or experience in this area would be appreciated? BTW all my claims go through payroll so NI and tax are (hopefully) calculated correctly by them.
Alternatively I could claim in April but my tax will still top the upper bracket if I continue to gain the additional work. As this isn’t my basic how would payroll ensure I received a stable amount of income all year if the total annual amount can not be foreseen? Will I just get a nasty tax bill at the end…. Any advice or experience in this area would be appreciated? BTW all my claims go through payroll so NI and tax are (hopefully) calculated correctly by them.
0
Comments
-
At the moment you are well within the 20% band on your salary. It really depends on how much your additional income is.£705,000 raised by client groups in the past 18 mths :beer:0
-
You can earn up to 40835 per annum (after any pension payments have been deducted) before the amount over that figure is taxed at 40% tax instead of 20% tax.
If the extra money takes you over 40835 (net of pension contributions ) and you can delay the extra income to next tax year then that may be in your interest.0 -
Thanks - I would estimate I would be 40k in Feb and then either 42k approx in March - additional income on top would be payment of 1.8k so would be liable to be taxed.0
-
Do you pay anything in pension contributions?0
-
Yes - I pay 6% I think and my employee matches this (local authority).0
-
If you pay 6% into an occupational pension then
e.g. 40,000 gross means 37,600 (i.e. reduced by 6%) taxable salary.
or 42,000 gross would only be 39,480 taxable0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.2K Banking & Borrowing
- 254.3K Reduce Debt & Boost Income
- 455.3K Spending & Discounts
- 247.2K Work, Benefits & Business
- 603.8K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.3K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards