40% Tax on earnings?

henrygregory

Good morning, I am looking for some advice re a pay increase.
I am due to have a meeting with my manager to ask for a pay increase. I currently earn around £30,000. This means I am paying 20% Tax.
I have compared the work I do to similar companies and current job adds, and can see that I could easily be earning between £35-45k. I am going to ask for 35,000.
If I were to be sucesful, I would then be paying 40% tax. Would this make me worse off than if I was to stay on what I was currently on?

Kayalana99

No hun once you pass the 40% tax threshold you pay 40% on whatever is over.

I.e If you earn 100k and the tax threshold was 50k for 40% you'd pay;

20% at 50k = 10k
40% at the remaining 50k = 20k

So u'd pay 30k tax (Obviously false figures though as the threshold isn't 50k)

Catwoman1975

The higher rate tax band is over £40k so you would still only pay 20% tax on £35k. You pay 40% on anything over £41,450

henrygregory

Kayalana99 wrote: »

No hun once you pass the 40% tax threshold you pay 40% on whatever is over.

I.e If you earn 100k and the tax threshold was 50k for 40% you'd pay;

20% at 50k = 10k
40% at the remaining 50k = 20k

So u'd pay 30k tax (Obviously false figures though as the threshold isn't 50k)

Ahah, I see, thanks very much for the clarification :money:
Tax is such a confusing area!

M0ney

You don't start paying 40% tax until you earn just over £41k. My basic salary is a hair over £40k and I don't pay 40% unless I do overtime and even then it's only the overtime which is taxed at 40% not the whole wage. I earned just under £43k last year and because I'd had some good months with overtime they're'd been a fair amount of 40% tax applied but the good news is that there was too much and I received a nice refund of £1,300 as I'd overpaid. So what I'm saying is get as much of a pay rise as you can and don't get hung up on how heavily you will be taxed.

henrygregory

M0ney wrote: »

You don't start paying 40% tax until you earn just over £41k. My basic salary is a hair over £40k and I don't pay 40% unless I do overtime and even then it's only the overtime which is taxed at 40% not the whole wage. I earned just under £43k last year and because I'd had some good months with overtime they're'd been a fair amount of 40% tax applied but the good news is that there was too much and I received a nice refund of £1,300 as I'd overpaid. So what I'm saying is get as much of a pay rise as you can and don't get hung up on how heavily you will be taxed.

Thanks, very helpful

zugzwang

You can maybe stick a bit more in the pension pot so you don't have to pay 40% on anything.

niftyone

A good place to post these sort of questions is the Tax Forum where the Tax Peeps hang out.

http://forums.moneysavingexpert.com/forumdisplay.php?f=22

Mrs_Money

M0ney wrote: »

You don't start paying 40% tax until you earn just over £41k. My basic salary is a hair over £40k and I don't pay 40% unless I do overtime and even then it's only the overtime which is taxed at 40% not the whole wage. I earned just under £43k last year and because I'd had some good months with overtime they're'd been a fair amount of 40% tax applied but the good news is that there was too much and I received a nice refund of £1,300 as I'd overpaid. So what I'm saying is get as much of a pay rise as you can and don't get hung up on how heavily you will be taxed.

Not correct unfortunately - the levels have recently been coming down!
The 40% rate kicks in at £32011 (year 2013-14). Of course you only pay the higher rate on any part of your salary over that figure.
rates all HERE.
Sad but true.

redcard

Mrs_Money wrote: »

Not correct unfortunately - the levels have recently been coming down!
The 40% rate kicks in at £32011 (year 2013-14). Of course you only pay the higher rate on any part of your salary over that figure.
rates all HERE.
Sad but true.

Have you forgotten about the personal allowance?

Mrs_Money

Of course we all have a personal allowance before we start paying tax, but that's a different issue to this and does not affect the fact that tax is 40% on every £ you earn over £32,011. (well, up to another level, when it becomes 50%:eek:)