At what point do you pay 40% tax?

happymumto2

Have done several searches but can't find what I'm looking for, so sorry if this has been posted before.
My colleagues and I were recently fortunate enogh to win our appeal with the NHS over our pay. We were all under the impression that 40% tax was paid on earnings over 40k, however having looked on the HMR site it looks like this has been dropped to earnings over 34,800, is this correct as surely it should have gone up over the years not reduced! If it is correct then this is going to affect 90% of us, puts rather a dampner on our win!

tinkerbell84

It's 34,800 PLUS your tax free allowance (usually 6035) so earnings would have to be a fair bit over £40k to pay 40% tax.

happymumto2

tinkerbell84 wrote: »

It's 34,800 PLUS your tax free allowance (usually 6035) so earnings would have to be a fair bit over £40k to pay 40% tax.

Thats better news though as I was forced to take a company car will probably push me over the threshold if not this year then next as my personal allowance is only 5200. Though will not affect those on old contracts using their own car.

KieranB

tinkerbell84 wrote: »

It's 34,800 PLUS your tax free allowance (usually 6035) so earnings would have to be a fair bit over £40k to pay 40% tax.

For another month at least. As of April the personal allowance (for most taxpayers) is rising to £6475.:j

sarflee

Also the 20% level increases from £34800 to £37400 after 6 April.

VfM4meplse

happymumto2 wrote: »

My colleagues and I were recently fortunate enogh to win our appeal with the NHS over our pay.

Was this an AfC banding review or a payroll dispute?

happymumto2

VfM4meplse wrote: »

Was this an AfC banding review or a payroll dispute?

This was an AFC banding review, we went from a 6 to a 7 on appeal, and are now owed 5 years backpay :j

Mikeyorks

Is there an agreed date for the 'back pay' .... or are these now genuine 'arrears' of pay construed to have an operational date going back into each year?

If the latter ... does not the award fall into the earnings basis shown at :http://www.hmrc.gov.uk/manuals/eimanual/EIM42290.htm ...... and fairly well described in the single sentence :

It must be broken down into sums attributable to the years that the arrears are for.

.... probably a bit academic if the arrears don't lift you into 40% this year? But I would have thought whoever handled the appeal on your behalf should have spelt out the taxation implications fairly clearly?

happymumto2

Mikeyorks wrote: »

Is there an agreed date for the 'back pay' .... or are these now genuine 'arrears' of pay construed to have an operational date going back into each year?

If the latter ... does not the award fall into the earnings basis shown at :http://www.hmrc.gov.uk/manuals/eimanual/EIM42290.htm ...... and fairly well described in the single sentence :



.... probably a bit academic if the arrears don't lift you into 40% this year? But I would have thought whoever handled the appeal on your behalf should have spelt out the taxation implications fairly clearly?

Have to admit that goes way over my head, I know we are going to be paid backpay from October 2004. We had to submit our own appeal, nobody actually did it on our behalf, this was then reviewed by the AFC assimilation panel who agreed we had been banded incorrectly, nobody mentioned tax implications, and we have no idea of when the arrears will be paid although it may be paid within the next 8 weeks (thats just Chinese whispers though!).

I would have thought though I am probably wrong, that as these are genuine pay arrears that the backpay, should be taxed over the relevant years rather than include it into this tax year. If it is all included in the one tax year then we will all be pushed into 40% tax this year. Those who go into the top of the banding will get 39200 basic, add weekends and on calls it will be around 42k, add the 5 years backpay they are expecting about 12k, then they are going to be well over if its lumped into this tax year. I will go onto a basic of 35500, 38k with weekends and on calls and am expecting 5-6k backpay, so I would imagine I too will be hitting the 40% if it is lumped into this years taxable pay :eek:

cowbutt

http://listentotaxman.com/

Robert_Sterling_3

When I was younger my main ambition was to pay Higher Rate Tax and it was 60p in the £ at that time.
If only I had to pay Higher Rate Tax now ... Heaven. :j :j :j