Will I be taxed at 40% in this situation....

thenap80

Hi

I earn 43k as a salary and so am practically at the threshold almost for paying 40pc income tax.

I have a house that I want to rent out and would earn about 12k from this per annum.

Obviously this 43k plus the 12k would be well into paying the 40% income tax...HOWEVER....my question is this:

Because I pay into a PAYE pension through work which is about £450 a month (I think!), would this be offset against the taxable income. That is to say, would my 43k be lowered by 12 months worth of £450. And therefore have a bit more income to earn st only 20% tax.

Basically I don't really want to be renting out my house if i get taxed a massive 40pc on the monthly £1000.

Bloody taxman!!!

kidmugsy

I don't see your problem: if you want to avoid 40% tax just contribute enough to your pensions.

le_loup

thenap80 wrote: »

Basically I don't really want to be renting out my house if i get taxed a massive 40pc on the monthly £1000.

Bloody taxman!!!

I wonder if you'll say the same when the ambulance comes to take you to hospital when you have a heart attack?

atush

yes, your contributions to a pension lower your salary, So you need to put in 12K a year incl TR to take the 12K income out if HRT.

The bloody taxman also pays for the firemen to come put out the fire in your home and BTL?

ajbell

Thats a bad day when your house catches fire and you have a heart attack.

Playing_with_Fire_2

You should also look into the costs that you can deduct from your BTL before paying tax.

atush

ajbell wrote: »

Thats a bad day when your house catches fire and you have a heart attack.

too true, but this is where the bloody tax man. and the bloody insurance companies can be a help.

atush

Playing_with_Fire wrote: »

You should also look into the costs that you can deduct from your BTL before paying tax.

Which are going to be less, now that you c ant get relief on the full amt of your mtg.

thenap80

Sorry but I didnt understand. So I am i a good position to not pay the 40% tax rate? I did a calculator and it gave me this ...

"Earn £43,000 in 2015/2016 and you'll take home £28,431. This means £2,369 in your pocket a month.

Over the year you'll pay £5,638 income tax and £4,131 in National Insurance.

You'd get £560/month in your pension fund."

I need to know if I can subtract the pension contributions from the 43k gross income an therefore be left with some leeway left over to earn money (hopefully from renting out house) to still only pay the 20% tax.

Thanks for the replies. I only say bloody tax man because it seems steep when you go just over into the higher rate for just a little bit of income. I realise we all have to pay tax!

AlanP_2

thenap80 wrote: »

Thanks for the replies. I only say bloody tax man because it seems steep when you go just over into the higher rate for just a little bit of income. I realise we all have to pay tax!

Yes but you ONLY pay 40% tax on the bit over the allowance.

Personally speaking I would be a lot happier being a HR taxpayer than a BR taxpayer as I would have more money.

If you can avoid the 40% by putting it into a pension then it makes sense but moaning that you earn enough to pay HR tax makes no sense to me at all.

martinsurrey

AlanP wrote: »

Yes but you ONLY pay 40% tax on the bit over the allowance.

Personally speaking I would be a lot happier being a HR taxpayer than a BR taxpayer as I would have more money.

If you can avoid the 40% by putting it into a pension then it makes sense but moaning that you earn enough to pay HR tax makes no sense to me at all.

Exactly, I loved the day I started to pay HR tax, it meant I had more money.