New Higher Rate Taxpayer

dmcconachie

Hi folks,
I recently had the (mis)fortune to limp into the higher rate tax bracket and now feel like a fish out of water. Is there an Idiot's guide anywhere? How does this effect savings, investments, bank accounts etc etc. Who do I need to tell? I've never even looked at the dreaded tax return form! :eek:

CLAPTON

so your income is going to be over 40,835 this tax year or over £43,875 2009-10 tax year where your earning are
earning including benefits in kind, plus (grossed up) interest plus grossed up dividend less pension payments?

You need to tell the tax office at the end of the tax year as you will have to pay the extra tax on the amount over 40,835 .. they will send you a self assessment tax form. No-one else needs to be told. You have until Oct to send back the paper form or until Jan 2010 if you complete online.

sarflee

Being a higher rate taxpayer is no longer a criteria for filling in self assessment tax forms unless you receive a large amount from investment income. They now issue forms so that any tax due on investment income can be collected via an adjustment to your tax code.

They should contact you when they discover you are higher rate, however this isn't always the case. I would be tempted to send in details of any other income you receive from investment etc, after the end of the tax year, and they should then tell you if you need to pay any extra tax.

dmcconachie

CLAPTON wrote: »

so your income is going to be over 40,835 this tax year or over £43,875 2009-10 tax year where your earning are
earning including benefits in kind, plus (grossed up) interest plus grossed up dividend less pension payments?

How do these numbers tie in with those at the bottom of this page!?
http://www.hmrc.gov.uk/rates/it.htm

CLAPTON

well

6035 plus 34,800 = 40,835

and

6475 plus 37,400 = 43,875

dmcconachie

Right...so the higher tax bracket is essentially 40,835 and not 34,600!? So I'm actually just shy of the threshold and not through it like my employer is telling me!? (Taxable YTD = £38k).

Sorry for being a little naive, this has caught me a little by surprise today!

cfnc

It depends on what your tax code is, you will be in the higer rate tax bracket if you earn £34800 plus your tax free amount, So it is possible that your employer is correct.

Kirsty

dmcconachie

Tax code is 540L

cfnc

That would you could earn £40200 by the end of march or 5th april if you are paid weekly.

Kirsty

dmcconachie

That's what I thought. So looks like I need to speak to payroll again!

Thanks folks, will update when I get to the bottom of it!

CLAPTON

what exactly is your employer telling you and why..

if you mean your taxable YTD is 38k that simply means your gross pay less any occupational pension is 38k ...