Salary plus mileage allowance query?

p_camp1

Hi

I'm a basic rate tax payer and have just been offered a job with a starting salary of £40,000 plus a £5,000 car allowance.

Does this mean that I move into the higher rate of tax? surely paying more tax would make me worse off than my existing salary?

Does this affect the child benefit we receive?

Thanks
Paul

Caz3121

you do not pay the higher tax on the whole salary only on the excess that is in that band

If your car allowance is taxable that puts you on £45k which (on a normal tax code) would be £660.83 per month tax (£623.33 at the 20% rate and £37.50 at the 40%)

p_camp1

Thanks, so on £40,000 plus £5,000, am I taxed at 22% up to 44,000 and then taxed at 40% on anything higher?

mitchaa

p_camp1 wrote: »

Thanks, so on £40,000 plus £5,000, am I taxed at 22% up to 44,000 and then taxed at 40% on anything higher?

22%?

It's been 20% for a good few years now:rotfl:

As to child benefit, in 2013 so I suspect you will get a few payrises in the time up until then, then yes you will lose child benefit.

tomitma

Gord what is this country coming too? you have the chance of earning 45,000 pounds, and you are worried about losing your child benefit, well if you are that worried stay on the dole, you can then spend the child benefits to your hearts content.

I wish all problems were this easy to answer.

getmore4less

http://www.hmrc.gov.uk/rates/it.htm

0% upto £6,475
20% between and £43875.
40% tax kicks in at £43875

Not sure if pension payments would save the child allowance they work great for tax credits, which results in almost free pension contributions.

once you hit 40% extra pension is worth considering anyway.

p_camp1

tomitma wrote: »

Gord what is this country coming too? you have the chance of earning 45,000 pounds, and you are worried about losing your child benefit, well if you are that worried stay on the dole, you can then spend the child benefits to your hearts content.

I wish all problems were this easy to answer.

I'm not on the dole, I'm just moving jobs into a more senior role. And I'm not going to apologise for what I am earning, I've worked hard to get where I am now.

I (wrongly) assumed that once I went over £44K that I was hit with 40% tax on the WHOLE amount.

Thanks to those who took the time to post sensible replies....

Eyeballs99

I can't see what the problem is with somebody who works hard for a living to still be asking about their child benefits.

It's the ones who don't contribute to society you should be worried about.

Well done on job offer, enjoy the extra income.

forgotmyname

Pay child allowance for the 1st child? If you want more then dig deep?

p_camp1

getmore4less wrote: »

0% upto £6,475
20% between and £43875.
40% tax kicks in at £43875

Not sure if pension payments would save the child allowance they work great for tax credits, which results in almost free pension contributions.

once you hit 40% extra pension is worth considering anyway.

Hi Thanks for getting back to me on this, how does this work, paying extra pension payments works great for tax credits resulting in almost free pension contributions? Sorry, I've never heard of this, is there any other posts/literature out there I can read up on this?

Thanks again.