Moving from Higher Rate Tax to Basic Rate midyear.

diesel2000

Hi, ive just moved from a job where I was a higher rate taxpayer (40%) and into a job where I will be on the basic rate of tax.

Im concerned that in Januarys pay I will be taxed at the 40% rate until the end of the tax year as I have already earned well over the £40k allowance.

Is this the case or is it calculated on a month to month basis?

Thanks in advance for any help.

Darksparkle

diesel2000 wrote: »

Hi, ive just moved from a job where I was a higher rate taxpayer (40%) and into a job where I will be on the basic rate of tax.

Im concerned that in Januarys pay I will be taxed at the 40% rate until the end of the tax year as I have already earned well over the £40k allowance.

Is this the case or is it calculated on a month to month basis?

Thanks in advance for any help.

It's based on your income for the tax year so will take into account the income and tax already paid since April.

Innys1

diesel2000 wrote: »

Hi, ive just moved from a job where I was a higher rate taxpayer (40%) and into a job where I will be on the basic rate of tax.

Im concerned that in Januarys pay I will be taxed at the 40% rate until the end of the tax year as I have already earned well over the £40k allowance.

Is this the case or is it calculated on a month to month basis?

Thanks in advance for any help.

If you've already earned more than the HR threshold, which is what I think you're saying as there's no £40k "allowance", why wouldn't you expect to be taxed at 40% on your earnings between now and 5th of April?

CLAPTON

diesel2000 wrote: »

Hi, ive just moved from a job where I was a higher rate taxpayer (40%) and into a job where I will be on the basic rate of tax.

Im concerned that in Januarys pay I will be taxed at the 40% rate until the end of the tax year as I have already earned well over the £40k allowance.

Is this the case or is it calculated on a month to month basis?

Thanks in advance for any help.

assuming your P45 details are carried over to your new job, then your tax at year end will be correct.
Tax is re-worked out each month based on your pay to date and tax already paid.

CLAPTON

Innys1 wrote: »

If you've already earned more than the HR threshold, which is what I think you're saying as there's no £40k "allowance", why wouldn't you expect to be taxed at 40% on your earnings between now and 5th of April?

you appear to misunderstand how tax works
one pays 40% tax once your pay to date exceed your pro-rataed 40% tax allowance (plus pro-rataed tax allowance) and not when you get to 40k(ish)

getmore4less

diesel2000 wrote: »

Hi, ive just moved from a job where I was a higher rate taxpayer (40%) and into a job where I will be on the basic rate of tax.

Im concerned that in Januarys pay I will be taxed at the 40% rate until the end of the tax year as I have already earned well over the £40k allowance.

Is this the case or is it calculated on a month to month basis?

Thanks in advance for any help.

It kind of works month by month on a cumulative basis with 1/12 of the personal allowance and 1/12 of the 20% band getting added each month to tax the cumulative pay for that month

What will happen is(asuming tax code and P45 processed) the new pay will not use up all of the 20% band so a bit of what was previously taxed at 40% can be used so you get a bit of tax back on that.

All hidden in the way PAYE works there should be enough time for the end of year tax to be correct if they have your P45 and process it.

diesel2000

Thanks for the guidance everyone, much appreciated!