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Income tax brackets.
Naetha
Posts: 72 Forumite
in Cutting tax
Apologies for being rather naiive, I tried to find this out but couldn't find anything that made sense.
How is income tax calculated? Do you pay 10% on 0-£2150, 22% on £2151-33,300 then 40% on earned income greater than £33,301? Or do you pay 40% on all your earned income if you earn greater than £33,301?
In essence my question is, if you earn £33,301, will your take home pay be almost 18% less than if you earn £33,000?
Cheers
How is income tax calculated? Do you pay 10% on 0-£2150, 22% on £2151-33,300 then 40% on earned income greater than £33,301? Or do you pay 40% on all your earned income if you earn greater than £33,301?
In essence my question is, if you earn £33,301, will your take home pay be almost 18% less than if you earn £33,000?
Cheers
0
Comments
-
You need to actually earn £38,335 before you're liable for tax at 40% as the bands you mention are after the tax free allowance of £5035.
However if you are only £1 over you will only pay 40% tax on that £1 not the whole lot.0 -
Perfect answer, thank you very much 0
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