Higher Rate Of Tax?!?!?!?

MickKnipfler

What happens if your gross is above the 40% band but you opt to pay anything over that into a pension (and therefore paying a max of 22%) and then you have a company car? Is the "benifit in kind added in and you pay 40% anyway or is it just taxed at you highest rate (22%)?

tonytooth

Not to confuse the issue further, but i think clarab was right...

Taxable income

2006/2007
rate of tax

0 - £2,150
10%

£2,151 - £33,300
22%

Over £33,300
40%

Elaine_Wilson

Lets get a few things clear. as has already been said higher rate tax will only apply when your total earnings for the year are above the threshhold. But you are likely to overpay tax.

Your first job does not use all your personal allowance but your second job is likely to be taxed at the basic rate of 22%. Does your earnings from either job vary week to week? If so then you will probably have to reclaim the overpaid tax at the end of each tax year.

If the income from one job is predictable it might be worth ringing your Inspector of Taxes and seeing if they could arrange the code numbers to collect the right amount of tax. This would involve issuing a NT code (no tax) for the job which has the stable income and then taking that income into account when issuing a code number for the other job.

Oh, and unless your employers are connected, each job is treated separately for national insurance purposes so you would not pay NI on a second job until the earnings exceed the lower earnings limit.