40% tax bracket with not "normal" tax code

manzo180

quick question / query

tax code is 80L (this is correct due to various BIK)

in 2012 the tax free allowance is £8105
in 2012 the 40% bracket is £34,370

normally you would add these together to get: £42475 which is the amount you can earn before paying 40% on anything above this.

however if your tax code is 80L (instead of 811L?) how does this effect when you start paying 40% tax?

does it work like this:

£34370
plus tax free allowance of £800

start paying 40% at >£35107?

hope this makes sense just trying to get my head around it :eek:

CLAPTON

yes it works like that

Mikeyorks

manzo180 wrote: »

does it work like this:

£34370
plus tax free allowance of £800

start paying 40% at >£35107?

hope this makes sense just trying to get my head around it :eek:

It does ........... if you get the arithmetic right!

£35,170

manzo180

thanks

to add a bit more complication and so i finally understand. how would salary sacrifice pension contributions work into this.

e.g. its taken before i see my wages essentially.

its 8.5%

so lets say 40k wages to keep it as simple as possible :S

8.5% pension contribution via SS leaves: £36600

assuming all details in my previous post (80L code)

40% is owed on £1430 (£36600 - £35170)

is that correct?

manzo180

Mikeyorks wrote: »

It does ........... if you get the arithmetic right!

£35,170

:o:o

oops! thanks

manzo180

manzo180 wrote: »

thanks

to add a bit more complication and so i finally understand. how would salary sacrifice pension contributions work into this.

e.g. its taken before i see my wages essentially.

its 8.5%

so lets say 40k wages to keep it as simple as possible :S

8.5% pension contribution via SS leaves: £36600

assuming all details in my previous post (80L code)

40% is owed on £1430 (£36600 - £35170)

is that correct?

any ideas anyone?

CLAPTON

yes, it works that way; the pension payments reduce your pay for both tax and NI

although salary sacrifice doesn't really make any difference to your tax (compared to 'normal' pension payments) but it does reduces your NI