How will the tax changes effect me?

Brighty

I'm still a bit confused by all this
Can someone explain using my numbers, as i think i'm getting close to the higher rate tax limit, certainly if i get a pay rise.

Salary £34k
Rental Income £7.5k
Expenses £1k
Mortgage Interest £2k

So currently, my taxable income is 34+7.5-1-2= £38.5k, comfortably within basic rate tax and therefore pay 20% on 7.5-1-2= £4.5k so i pay £900. What will it be in the new regime and what level of payrise before i'm considered a higher rate tax payer?

Cheers

Brighty

Bluebirdman_of_Alcathays

Brighty wrote: »

I'm still a bit confused by all this
Can someone explain using my numbers, as i think i'm getting close to the higher rate tax limit, certainly if i get a pay rise.

Salary £34k
Rental Income £7.5k
Expenses £1k
Mortgage Interest £2k

So currently, my taxable income is 34+7.5-1-2= £38.5k, comfortably within basic rate tax and therefore pay 20% on 7.5-1-2= £4.5k so i pay £900. What will it be in the new regime and what level of payrise before i'm considered a higher rate tax payer?

Cheers

Brighty

Assuming you have your full personal allowance, you won't be a higher rate taxpayer until you earn £42,385, so the change in the summer budget won't affect you.

Brighty

Found this handy link which has a calculator for the new rules.

https://www.rla.org.uk/taxcentre/tax-calculator.shtml

I understand it all now, you don't include mortgage interest when calculating yout total taxable income. Guess i'm £2k nearer the higher tax bracket than before. Won't need much of a pay and/or rent increase to push me over. Can see how this is going to have a big affect for those with much less equity and bigger mortgages than me.

Brighty