Confused about the new lower -high tax bracket!

herewegoagain2010

Just sitting down and trying to work out the damage to our pockets when the new cut off of 35k is introduced, but I've got mself in a complete muddle. I've tried putting the figures in a tax calculator, but the 11/12 doesn't seem to take into account the change.

My hubby's gross pay is 36929 pa, can anyone explain the difference in tax & NI to me before and after the changes. Trying to sort the new budget out for the next few months, but my head won't work lol!

Thanks in advance

Mikeyorks

If he has the standard personal allowance (£6475 this year .... £7475 next) then he doesn't come close to the 40% rate.

You add the personal allowance to the ceiling of the 20% rate (£35k) before you start to pay 40%........... ie £42,475

Blame much mis-reporting in the media!

CLAPTON

as above he is quite a way from the 40% tax band
however NI increases from 11% to 12 %

shop-to-drop

CLAPTON wrote: »

as above he is quite a way from the 40% tax band
however NI increases from 11% to 12 %

Isn't the NI increase only for high rate tax payers?

herewegoagain2010

No wonder my head hurts. I couldn't work out why the amount of tax he'll pay is actually lower than he does at the minute, according to the tax calculators. He's just got a £800 pay rise and we thought we could kiss it all goodbye. Thanks Mikeyorks, you've cleared up my query and the result is in our favour. I feel like we've just 'won' some money lol!

herewegoagain2010

Ahhhhh next question......NI is that 12% of the gross pa or before or after tax? I feel like my 5 year old, when one question and answer lead to so many more!

Mikeyorks

For most within 20% - the gain will be around £200 from the personal allowance - but with a loss of as much as £300 on the NI.

Isn't the NI increase only for high rate tax payers?

..... that is additionally increased from 1% to 2%.

CLAPTON

Ni is based on gross pay although if he is contracted out of the second state pension then it is less

Mikeyorks

herewegoagain2010 wrote: »

Ahhhhh next question......NI is that 12% of the gross pa or before or after tax?

As PAYE - it's charged on the gross. But also as PAYE you have an allowance below which (the Lower Earnings Limit) you don't pay NI.

Full detail :

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

joewa

Hi,my salary is £42000 with bonus of around £4000, how much am i in the higher band etc
Ta

noh

Mikeyorks wrote: »

As PAYE - it's charged on the gross. But also as PAYE you have an allowance below which (the Lower Earnings Limit) you don't pay NI.

Full detail :

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

The figure below which you don't pay NI is the Primary Threshold not the Lower Earnings Limit.
£139 per week next tax year.
So the OPs husband would be paying 12% on weekly earnings between £139 and the upper earnings limit of £817 per week and 2% on weekly earnings above that figure.