40% Tax help please

noodlespink2

My husband is on 'peace work' so we never know exactly how much he will get paid a week, month, year etc. He has been lucky to have a very good year and may exceed the £43000 by mid march. How will this affect the tax as i know it will take him into the 'super tax' bracket, is that just paid for the amount of weeks he is £42475!
Any help gratefully received, thanks in advance

CLAPTON

he will be taxed at 40% instead of 20% only on the amount over 42475
i.e. 525 if he earns 43,000
however he will only be charged NI at 2% instead of 12% so it won't make a lot of difference to him

so instead of 32% of 525 = 168 in deductions
he will pay 42% of 525 = 220.5

somethingcorporate

Super tax is over £150k so a little way to go yet!

grey_gym_sock

somethingcorporate wrote: »

Super tax is over £150k so a little way to go yet!

that's "additional rate" ... super tax was abolished some time ago (IIRC, it was a tax on super-heroes )

chrisbur

40% tax will only be paid on the earnings over £42475. Tax is deducted each month on the basis of what is owed up to that point so say in month 1 you earned £100 over 1/12 of £42475 then you would pay tax at 40% on that £100. But then say by month 2 you had earned £100 less than 2/12 of £42475 your tax would be adjusted so that the 40% you had paid would be converted to 20%. If in month 3 you are earning £100 over 3/12 of £42475 then you pay some 40% tax on the £100 and if in month 4 you have earned £100 under 4/12 again you get that converted to 20% tax. This goes on every month so that as your earnings vary you either pay some 40% tax if they are high enough or get it converted to 20% tax if they are low enough. Finally you get to month 12 when your tax is calculated for the full year.

So some 40% tax may allready have been paid this year and possibly some or all of it repaid; but at the end of it all the 40% will only be paid on the part that is over £42475 and at some point in the year you will have paid a lower NI rate on most of the earnings you pay higher tax on. If you pay NI at the A rate then broadly your combined tax and NI goes from 32% to 42%.

kidmugsy

Do have a look at the pensions forum to see how he can avoid paying 40% tax by making a pension contribution.

noodlespink2

Thanks for everyones help, really appreciate it

kidmugsy - will have a look now thanks