Tax question

cah1234

Hello,

I have just this month earned £44,500 for the year so far. I am confused as to why I am not yet being taxed 40%.

Is this normal? I don't want to be taxed extra next year.

chrisbur

cah1234 wrote: »

Hello,

I have just this month earned £44,500 for the year so far. I am confused as to why I am not yet being taxed 40%.

Is this normal? I don't want to be taxed extra next year.

You have probably been paying 40% tax since the start of the tax year if your earnings are spread evenly and you have the usual sort of tax code, but cannot really check unless you give the figures. You need to give the tax month or date of last payment, taxable gross if different from above figure, tax code and tax paid.

pjread

if you're PAYE the employer effectively spreads the tax bands/allowance over the year. so your marginal few pounds have probably been taxed 40% throughout.

cah1234

Thanks for your reply.

I am paid weekly, so was last paid on Friday. My tax code is 944L.

I did not earn this amount in the whole of the last financial year. I have only earned more this year due to a job change and loads of overtime.

pjread

essentially, they look at your pay, your tax code, your pay-this-tax-year and try to sort your deductions to be in line with the 'expected' end of year figure. NI is a bit more of an anomoly as it's per-week based if I recall correctly. But essentially, it should work out ok if you're employed/PAYE.

chrisbur

cah1234 wrote: »

Thanks for your reply.

I am paid weekly, so was last paid on Friday. My tax code is 944L.

I did not earn this amount in the whole of the last financial year. I have only earned more this year due to a job change and loads of overtime.

Pay on 29/11 means you are on week 34
44500 less 34/52 of tax allowance of 9445 which is 44500 - 6176 = 38324 taxable pay.
20% allowance for the year is 32010 so 34/52 of that is 20930 on which you pay 4186 and have 38324 - 20930 = 17394 on which to pay 40% tax which is 6958
4186 (20% tax)+ 6958 (40% tax) is 11144 tax paid to date, or something around this as I have rounded figures to keep the sums easier.

cah1234

chrisbur wrote: »

Pay on 29/11 means you are on week 34
44500 less 34/52 of tax allowance of 9445 which is 44500 - 6176 = 38324 taxable pay.
20% allowance for the year is 32010 so 34/52 of that is 20930 on which you pay 4186 and have 38324 - 20930 = 17394 on which to pay 40% tax which is 6958
4186 (20% tax)+ 6958 (40% tax) is 11144 tax paid to date, or something around this as I have rounded figures to keep the sums easier.

Once again, thank you for your very useful reply. So far it have paid £10764 in tax.
So am I right in thinking that I am currently being taxed at the higher rate?

chrisbur

cah1234 wrote: »

Once again, thank you for your very useful reply. So far it have paid £10764 in tax.
So am I right in thinking that I am currently being taxed at the higher rate?

You are certainly paying some tax at 40% but seems a bit low to me can you confirm taxable earnings are 44500 they may not be the same as your total gross. Does your payslip say week 34?