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Tax bands/codes for higher salary?

hieveryone
Posts: 3,858 Forumite


in Cutting tax
Hi all,
I am after some major help as I have just suddenly had something occur to me that I don't think is a great situation!
I applied to, and was offered a new job recently, a promotion.
My salary at the moment is £28k. I will be moving to a salary of £42k.
Whilst trying to re-work my budgets etc for the next year it has occured to me that my tax code will change and I will possibly be paying much more tax - 40% bracket (??)
I have no idea about these things at all, can someone point me in the direction of somewhere that can either a - explain it, or b - tell me what I will be walking out with monthly please?
Thanks
I am after some major help as I have just suddenly had something occur to me that I don't think is a great situation!
I applied to, and was offered a new job recently, a promotion.
My salary at the moment is £28k. I will be moving to a salary of £42k.
Whilst trying to re-work my budgets etc for the next year it has occured to me that my tax code will change and I will possibly be paying much more tax - 40% bracket (??)
I have no idea about these things at all, can someone point me in the direction of somewhere that can either a - explain it, or b - tell me what I will be walking out with monthly please?
Thanks
Bought is to buy. Brought is to bring.
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Comments
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Assuming that you have nothing reducing your personal tax allowance then you can earn nearly 42.5 thousand before you pay any 40% tax. Also when you do pay it you only pay it on the part that goes over the 20% band not your full salary and at the point you start paying it (again assuming you have no taxable benefits) your NI payments go down, if on A rate NI they drop from 12% to 2%.0
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Assuming that you have nothing reducing your personal tax allowance then you can earn nearly 42.5 thousand before you pay any 40% tax. Also when you do pay it you only pay it on the part that goes over the 20% band not your full salary and at the point you start paying it (again assuming you have no taxable benefits) your NI payments go down, if on A rate NI they drop from 12% to 2%.
Ah - thank you so much! I had visions of nearly half my salary being taken from me :rotfl:
Just one question - on the HM Revenue site, it states that the rate is something like £31k before moving to the 40% bracket?
Bought is to buy. Brought is to bring.0 -
hieveryone wrote: »Just one question - on the HM Revenue site, it states that the rate is something like £31k before moving to the 40% bracket?
That's the taxable income bracket which for this year is £34,370. You have to add the personal allowance to this.
By the way your tax code will not change as it's linked to the personal allowance and not what you earn.0 -
That's the taxable income bracket which for this year is £34,370. You have to add the personal allowance to this.
By the way your tax code will not change as it's linked to the personal allowance and not what you earn.
Unless of course the new promotion comes with things like company car, health care which may see an impact to their tax code.Thinking critically since 1996....0 -
somethingcorporate wrote: »Unless of course the new promotion comes with things like company car, health care which may see an impact to their tax code.
This is true. My basic salary is in the 40% bracket but I get things like private health/critical illness/other taxable benefits as part of the package. This reduces my gross salary (still within the 40% bracket), but it means my tax code is now something like 605 not 810 or whatever the usual personal allowance is."Save £12k in 2019" #120 - £100,699.57/£100,0000 -
somethingcorporate wrote: »Unless of course the new promotion comes with things like company car, health care which may see an impact to their tax code.
Yes of course it does. The tax code is changing because these benefits are taxable and must either be coded out or tax paid via SA.
However the point was that the tax code does not change simply because of an increase in salary.This is true. My basic salary is in the 40% bracket but I get things like private health/critical illness/other taxable benefits as part of the package. This reduces my gross salary (still within the 40% bracket), but it means my tax code is now something like 605 not 810 or whatever the usual personal allowance is.
It might reduce your net salary but it doesn't reduce your gross salary.0 -
It might reduce your net salary but it doesn't reduce your gross salary.
Hmm, I select my flexi-benefits in June each year, and get a letter from the company telling me what my new annual salary is (unless I've misremembered, which is entirely possible). I remember wondering what I would put as my new annual salary were I to change jobs. I seem to recall the last letter reduced my annual salary by about £8k."Save £12k in 2019" #120 - £100,699.57/£100,0000 -
Hmm, I select my flexi-benefits in June each year, and get a letter from the company telling me what my new annual salary is (unless I've misremembered, which is entirely possible). I remember wondering what I would put as my new annual salary were I to change jobs. I seem to recall the last letter reduced my annual salary by about £8k.
That's my point.
Your actual salary is not inclusive of your taxable benefits as people can choose (in some cases) what ones to have.
Your overall remuneration package does include any benefits and of course should be taken into account by you when you change jobs. However your P60 would give your salary as the amount with no benefits added on. They would be taken care of on your P11D.0 -
Thanks all for your replies.
My new job doesn't come with a new car or any other perks unfortunately - just an increase in responsibility and a 50 minute commute! :rotfl:
Bought is to buy. Brought is to bring.0 -
Hi again,
Sorry to resurrect this thread.
I have just been checking on the directgov website and noticed that for next year, the 20% bracket is being lowered from £34,370 to £32,010.
Does this mean that I will indeed be in the 40% bracket? If the personal allowance is £8100, that will mean that the threshold is £40,110 and anything above will be 40%.
Have I worked this out correctly?
Bought is to buy. Brought is to bring.0
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