40% tax threshold lowered?

*Rainbow*Warrior*

Have just seen a news story on yahoo saying that from April the threshold for paying 40% tax is being reduced to £35001. Is this true? It's the first I've heard of it and it seems a bit harsh.

My husband currently earns 35.4k so he will be just over the threshold. His monthly tax now is around £450, and I assume he is on 20% tax now. So does this really mean from April his monthly tax will increase to around £900?

Just seems ridiculous. We will not be able to manage if this happens, so thought I'd check if it's true?

Stinkybell

Sadly the rise is true, Osborne announced it as part of the emergency budget back in June http://www.direct.gov.uk/en/Nl1/Newsroom/Budget/Budget2010/DG_188500

However, he'll only pay 40% on earnings above the £35k threshold - less than £10 extra a month for you!

*Rainbow*Warrior*

Oh thanks ever so much! I can breathe again!!!!!

I missed the budget announcement, so this was a complete shock to me. I'm really glad you explained that, though - doesn't seem quite so bad now.

Thank you again :beer:

noh

If he earns £35.4k he won't be paying tax at 40%.

The threshold is being reduced to £35000 the tax free allowance is being increased to £7,475.
Therefore 40% tax is not due until earnings exceed £42475 p.a.

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

apcorbett

Although there is a sting in the tail the following year, as all of those extra people who are ending up paying higher rate tax will also lose any child benefit they get as well.

*Rainbow*Warrior*

I'm very confused now - but thanks for the replies, I do appreciate the help.

I thought child benefit was paid to the mother (me)... am I in danger of losing that because of my husband's income? I'm currently working part time but in danger of redundancy.

noh

*Rainbow*Warrior* wrote: »

I'm very confused now - but thanks for the replies, I do appreciate the help.

I thought child benefit was paid to the mother (me)... am I in danger of losing that because of my husband's income? I'm currently working part time but in danger of redundancy.

No because your husband is still £7k below the 40% tax threshold.

If he was earning more than £42475 then you would lose the child benefit.

CLAPTON

*Rainbow*Warrior* wrote: »

I'm very confused now - but thanks for the replies, I do appreciate the help.

I thought child benefit was paid to the mother (me)... am I in danger of losing that because of my husband's income? I'm currently working part time but in danger of redundancy.

yes the idea is that rich people shouldn't be paid universal benefits
so child allowance is being scrapped for high earner i.e. if some-one is taxed at 40%
all part of the fairness and all in it together agenda

I surprised you didn't notice it over the summer... it was wall to wall TV and newspaper coverage for several weeks

*Rainbow*Warrior*

CLAPTON wrote: »

yes the idea is that rich people shouldn't be paid universal benefits
so child allowance is being scrapped for high earner i.e. if some-one is taxed at 40%
all part of the fairness and all in it together agenda

I surprised you didn't notice it over the summer... it was wall to wall TV and newspaper coverage for several weeks

I do remember that stuff about high earners not getting child benefit, but never for a minute thought it would apply to us, so didn't pay that much attention. Also, I thought (in my innocence) that you had to earn over 40k before you had to pay tax at 40%. I mean, totally apart from this £42475 cut off that people are mentioning. I thought it was a blanket thing and as long as you earn less than 40k it didn't affect you. Actually, now I think about it, I have a feeling the 40k limit actually relates to the criteria for tax credit.

To be honest, and I know this will sound stupid and terrible, I've become so sick of politicians using TV airtime to just spout whatever they want to and not actually answer the questions asked I tend to just change channel when they come on as they annoy me so much!

apcorbett

CLAPTON wrote: »

yes the idea is that rich people shouldn't be paid universal benefits
so child allowance is being scrapped for high earner i.e. if some-one is taxed at 40%
all part of the fairness and all in it together agenda

I surprised you didn't notice it over the summer... it was wall to wall TV and newspaper coverage for several weeks

If you think that a household with one earner, totalling £43k a year gross is rich, then you are sadly mistaken, especially, as next door could be a family with two earners, totalling £80k between them, who would get the benefit.

Fairness?

noh

*Rainbow*Warrior* wrote: »

..........I do remember that stuff about high earners not getting child benefit, but never for a minute thought it would apply to us, so didn't pay that much attention. Also, I thought (in my innocence) that you had to earn over 40k before you had to pay tax at 40%.

It doesn't apply to you!
Your husband earns £7k less than the amount at which 40% needs to be paid next tax year.

Also, I thought (in my innocence) that you had to earn over 40k before you had to pay tax at 40%

Correct it's £43875 this tax year and £42475 next.