Higher rate taxpayer

ahall41116

Hi,

it looks like im going to get a pay rise in Jan 12 (hurray!) which will take me up to 35k per annum (exluding company car etc) but how will i be affected by the higher tax rate limit of 35001? do i get taxed at 40% on everything over 35001?

ash

smileylondongal

As far as I know, yes.

925dancer

Use this calculator, I'm mildly obsessed but it's very accurate and lets you work out exactly what happens where! http://listentotaxman.com/index.php

Oh and you will taxed on everything over the tax free allowance but not sure how it works thereafter, I rely on the aforementioned calculator

iamana1ias

ahall41116 wrote: »

Hi,

it looks like im going to get a pay rise in Jan 12 (hurray!) which will take me up to 35k per annum (exluding company car etc) but how will i be affected by the higher tax rate limit of 35001? do i get taxed at 40% on everything over 35001?

ash

No. Everything over £35001 plus whatever your personal allowance is (£7475 for most people).

KiKi

As the previous poster explained (but in a bit more detail!), income tax bands only apply to income that is taxable.

You receive a personal tax-free allowance, usually £7475, unless there are specific circumstances that apply to you or your job.

In simple terms, you are then taxed 20% on the next £35,000. And then 40% on the next £115,000. Then 50% over that. To be in the 40% band, you'd need to be earning £35K plus the amount of your personal tax allowance.

HTH
KiKi

Evilm

For most people who have the normal £7475 personal allowance a wage of £42476 will be the point that you start paying tax on the higher tax bracket.

ahall41116

i have a company car and private fuel which eats into my tax allowance, but i am still hopeful to not pay too much @ 40%

KiKi

Have you not read the previous replies?! Unless you have NO personal tax-free allowance, you won't pay any tax at 40%.

KiKi

Any

Yes, company car and fuel does eat into personal allowance.
What is your tax code now? Then we can say whether you still have some personal allowance remaining.
That site listentotaxman is very good, it let's you input in you tax code as well so it will calculate your actual net wages with taking the car and fuel into account. Try it.

But generally yes-you get personal allowance tax free, 35k at 20% and over that 40%.