40% Threshold

lemonade_lifestyle

Can anyone give me a lovely simple answer to my question.
I am not a stupid individual, however have become baffled with too much jargon.

After receiving my new coding notice for 2012/2013 I would like to know if I will be charged 40% tax on all my earnings (including personal allowance) over £34370. Or do I get charged 40% after my personal allowance has been reached and then I earn £34370?

I see my tax coding has increased, as has everyones, but yet the threshold for 40% tax charging has dropped. So in effect I have not had an increase in my personal allowance.

Dont get me wrong I dont earn loads but work for nhs on band 5 and do get unsociable enhancements so will earn only a little over the threshold

jem16

lemonade_lifestyle wrote: »

After receiving my new coding notice for 2012/2013 I would like to know if I will be charged 40% tax on all my earnings (including personal allowance) over £34370. Or do I get charged 40% after my personal allowance has been reached and then I earn £34370?

Higher rate tax threshold starts when you have a total taxable income of £42,475.

Dont get me wrong I dont earn loads but work for nhs on band 5 and do get unsociable enhancements so will earn only a little over the threshold

Remember to deduct pension contributions from that £42,475. Are you still over the threshold?

lemonade_lifestyle

No don't think I will have. Thank you for your prompt reply.
Think my March taxable pay amount was £35000 ish, havent had P60/April's payslip yet.
I am cutting down on overtime shifts this year so hopefully wont top my threshold for next financial year.
Just needed a concise answer, thank you again.

jem16

lemonade_lifestyle wrote: »

.Think my March taxable pay amount was £35000 ish,

You're nowhere near higher rate tax then. Your taxable pay would have to be £42,475 last year.

lemonade_lifestyle

No but was just worried.
Which is why I probably decided to stick needles in people and not persue a career in an accounts office.

chrismac1

Any chance you could nip round to your nearest tax office with some big needles?

Mikeyorks

lemonade_lifestyle wrote: »

So in effect I have not had an increase in my personal allowance.

Indeed you have ...... but the reduction in the 40% threshold is to ensure those who do cross it don't benefit from the personal allowance indexation.

lemonade_lifestyle

I have big needle and bone guns :rotfl:

Zyyb

Hi Lemonade,

You would only pay 40% tax on the amount above £34,370, not your entire wage @ 40%.

For every £1000 more you earn, you would be taxed at 40% instead of 20%

If you want to know how much you will pay in tax and NI, you should use www thesalarycalculator co uk - very helpful!

jem16

Zyyb wrote: »

Hi Lemonade,

You would only pay 40% tax on the amount above £34,370, not your entire wage @ 40%.

To be precise the OP will not pay any tax at 40% until taxable earnings are over £42,475.

Mrs_Money

jem16 wrote: »

To be precise the OP will not pay any tax at 40% until taxable earnings are over £42,475.

No, 40% tax rate now kicks once earnings reach £34370 (tax year 12/13).
As OP correctly said personal allowance has gone up a little, threshold for 40% has come down- that's how they balance the books LOL
All bands HERE on HMRC website.