Personal Allowance and HRT bracket

SpeedSouth

Hi,

I'm wondering how the personal allowance amount affects your entry into the HRT bracket of £43k. Currently my PA is just over £14k for one reason or another. Does this mean I can earn another £32K so £46K total before I pay 40% or simply I don't pay 20 % on that additional £3k of PA?

Thanks

[Deleted User]

Exactly that - i.e. both!!!

You have an extra £3000 (for whatever reason) before you pay any tax.

You must now earn £46000 before you pay 40% tax.

The extra £3000 of allowances saves you £1200 in tax.

polymaff

adam81 wrote: »

Hi,

I'm wondering how the personal allowance amount affects your entry into the HRT bracket of £43k. Currently my PA is just over £14k for one reason or another. Does this mean I can earn another £32K so £46K total before I pay 40% or simply I don't pay 20 % on that additional £3k of PA?

Thanks

How does it come to be £14k?

Dazed_and_confused

There's no such thing as a personal allowance of £14000.

You could have a tax code of 1400L which is what a standard code would be if the personal allowance was £14000 but there must be some other explanation such as job expenses, pension payment relief, gift aid relief etc.

You should log into your personal tax account and check why your code has been increased as this could be relevant to your original question.

Remember your tax code is only ever provisional and if you aren't entitled to such a high code the sooner you sort it out the smaller a debt you would be accruing.

polymaff

Dazed_and_confused wrote: »

There's ... accruing.

Why not just wait for the OP to reply to my previous?

SpeedSouth

Pension payments, transfer of marriage allowance previous over payments... as I said various reasons

Thanks makes sense

Dazed_and_confused

Marriage allowance would be removed if you became a higher rate payer (the extra Marriage Allowance amount in your code is ignored when calculating this). Although this is subject to much debate on MSE as gov.uk mentions earning over £43,000 not being higher rate payer.

Also the HMRC do not refund previous overpayments through your tax code so you may want to double check that and explain more about that as I think you're getting confused there

polymaff

adam81 wrote: »

Pension payments, transfer of marriage allowance previous over payments

OK. Let's get the terminology right. None of those items are parts of your Personal Allowance (default: £11,000).

Most pension payments (and charitable giving) extend your Basic Rate Band (default: £32,000), raising the threshold (default: £43,000 taxable income) at which you become a higher rate taxpayer.

Being the recipient of MAT doesn't shift any threshold - in fact it takes no part in your assessment to income tax. It is purely a cash rebate available to those whose total adjusted taxable income is less than the sum of their Personal Allowance and their Basic Rate Band.

Previous overpayments are also just a cash rebate, taking no part in subsequent years' assessment

SpeedSouth

Thanks, terminology aside I'm happy with explanations so I got a bit more to earn at under 40% tax