WTC calculation - I must be wrong..?

sdd56

Just been trying to calculate total income including WTC for self employed person working more than 30 hours per week, and according to my calcs, for 2011/12, net income is actually less if profit is 8K, compared with 7K.

According to my calcs:-

Profit= 7K, WTC = 2472, 0 tax, 0 class 4 NI, total = 9472

Profit = 8K, WTC = 2062, 105 tax, 720 class 4 NI, total = 9237

Based on: WTC = 2710, withdrawal rate 41%, threshold = 6420

Tax threshold 7475

NI threshold 7225

I've checked my calcs and can't see a mistake, but surely even the ConDems wouldn't be daft enough to impose a tax rate greater than 100% on the low paid??

zagfles

sdd56 wrote: »

Just been trying to calculate total income including WTC for self employed person working more than 30 hours per week, and according to my calcs, for 2011/12, net income is actually less if profit is 8K, compared with 7K.

According to my calcs:-

Profit= 7K, WTC = 2472, 0 tax, 0 class 4 NI, total = 9472

Profit = 8K, WTC = 2062, 105 tax, 720 class 4 NI, total = 9237

Based on: WTC = 2710, withdrawal rate 41%, threshold = 6420

Tax threshold 7475

NI threshold 7225

I've checked my calcs and can't see a mistake, but surely even the ConDems wouldn't be daft enough to impose a tax rate greater than 100% on the low paid??

You're working out NI on your entire profit, not just the part above the NI threshold (which you posted above but didn't use in your calculation). NI will be £69.75 not £720.

sdd56

Thanks - that is the mistake I made - for some reason I thought that if profit was above the NI threshold, the rate was applied to the whole profit.