40% Tax on earnings?

scheming_gypsy

you pay 40% on 32k over your personal allowance not on anything over 32k


http://www.hmrc.gov.uk/incometax/basics.htm

Remember, the tax band applies to your income after your tax allowances and any reliefs have been taken into account - you're not taxed on all of your income.

So after your tax free allowance you start paying tax on anything over 32k

Mrs_Money

[/QUOTE]Of course you only pay the higher rate on any part of your salary over that figure.
rates all HERE.
Sad but true.[/QUOTE]
Yes, that's correct, as I said you only pay 40% on the portion over the £32011.

Lokolo

Mrs_Money wrote: »

Yes, that's correct, as I said you only pay 40% on the portion over the £32011 PLUS PERSONAL ALLOWANCE.

Making it clear.

For most, its anything over ~£41k (£32k + standard £9k personal allowance)

lazer

You have a personal allowanc of £9,440 so it is at 0% tax, then the next £32,010 is at 20%

So that is a total of £41,450.

Any ernings over £41,450 are then taxed at 40%

Mulder00

I remember speaking to someone once who refused to work overtime, because they were convinced that when they went over the tax threshold, this overtime would cause their take home pay to drop!!!

When your earnings increase, your take home will always increase - it's just the amount with which it increases that gets less as you earn more.

nomunnofun

lazer wrote: »

You have a personal allowanc of £9,440 so it is at 0% tax, then the next £32,010 is at 20%

So that is a total of £41,450.

Any ernings over £41,450 are then taxed at 40%

I guess that I am one of those 'tax peeps'.

You are absolutely correct - it is just astounding how many people get this wrong.

£41450 is indeed the threshold before higher rate tax kicks in.

Earnings of £45000, for example, attracts tax:

32010 at 20%
3545 at 40%

M0ney

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.

I will gladly accept your magnanimous apology when you realise that you were wrong to correct me. :T

M0ney

Mrs_Money wrote: »

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:)

You're also wrong to state that there is a 50% tax band it's now 45%.

Suarez

Unbelievable how much dodgy information is being thrown about here!

System

If you have a straightforward single job you can use the Listentotaxman.com website to find further information on the exact amount of tax and national insurance you should be paying.