how to define 40% higher tax rate?

p1tse

So:
Personal Allowance £7,475
20% Tax Rate upto £35,000
40% Tax rate £35,001 - £150,000

This means anyone earning above £7475+£35000 = £42475 is classed as 40% higher tax rate.

I'm asking as new into a scheme for Child Care vouchers as higher tax rate is only £124 vs £245 before April 2011 government changes.

Is Higher Tax rate based on month income now and pro rate to full 12 months?

or does it take account this year and then plus new income?

Say before Yearly £30k, therefore £2.5k per month
Up until say August so from April - August = 4 months x £2.5k = £10k
Now August - April = 8 months say at (£43k) = £3.583/month x 8 = £28,667

Full year therefore £38,667.
Or Full year estimate based on now £43,000.

Bobl

Tax will be calculated at the end of the Tax Year on your gross annual salary, so if you pay extra now you will get it back via a tax refund. Higher Rate Tax Payers should complete a Self Assessment each Tax Year.

BoGoF

Bobl wrote: »

Higher Rate Tax Payers should complete a Self Assessment each Tax Year.

That is incorrect I'm afraid

Hammyman

p1tse wrote: »

So:
Personal Allowance £7,475
20% Tax Rate upto £35,000
40% Tax rate £35,001 - £150,000

This means anyone earning above £7475+£35000 = £42475 is classed as 40% higher tax rate.
.

No. It means anyone on over £35,000 is on 40% higher tax rate. You don't just add the categories together - the lowest number is the threshold.

GavB79

Hammyman, you are totally wrong. You add the personal allowance on; the OP is right

browneyedbazzi

GavB79 wrote: »

Hammyman, you are totally wrong. You add the personal allowance on; the OP is right

Quite right, £42475 is the current threshold for higher rate.

The HMRC website doesn't explain it very well though!

p1tse

Bit confusing so is it classed as higher rate or not? If it is then this affects child care vouchers?

browneyedbazzi

What you pay should be based on your projected earnings for the year - taking into account the fact that your income pre-august was lower you shouldn't be put into the higher rate band until next tax year. (presuming you are with the same employer or your new employer has your p45 showing your previous earnings for the year).

p1tse

browneyedbazzi wrote: »

What you pay should be based on your projected earnings for the year - taking into account the fact that your income pre-august was lower you shouldn't be put into the higher rate band until next tax year. (presuming you are with the same employer or your new employer has your p45 showing your previous earnings for the year).

thanks

basing on the above would mean lower tax band, however if add on other benefits will tip it over

annoying as i was getting the £240 child care vouchers before but with change in april 2011 rules have changed so i would be hit by this

getmore4less

If you search around there are loads of threads here and other forums on how to get round this borderline issue

AIUI a pension contribution can be effective.

pleasedelete

Higher rate tax relief was ended on childcare vouchers from April 2011. Those already in scheme can continue to get higher rate tax relief but not new joiners.

Is that relevant to your situation?