Higher tax band

Monkeygloves

Hi, I’m new here so may be in the wrong place. Due to an amount of overtime my last wage took my taxable income to just under 45k. My question is will I be taxed 40% on the entirety of my next two wages (taking me to the end of the tax year) as they’ll be over and above the basic tax threshold ?

Dazed_and_confused

Highly unlikely but as you haven't told us what your tax code is impossible to answer with any certainty.

If you are on a cumulative tax code (which is the norm) then you get 1/12th of your tax code allowances and basic rate band each month so you should in theory have 2/12ths of your tax code and basic rate band left.

If we take "just under 45k" to be say £44,500 after 10 months of the tax year then that is equivalent to annual taxable income of £53,400. So you are likely to already be paying some 40% tax and slipping into the range of Child Benefit clawback (if this applies to you).

Monkeygloves

Thanks for the reply, my tax code is 1150ll. This is the first time I’ll have exceeded the basic tax limit so I wasn’t sure if I’d have been taxed at 20% up to this point and then be hit with 40% on the full amount of my last two wages of he year?

chrisbur

If we assume that you are on a cumulative tax code, which is the most likely situation then as at month 10 anything you earn as taxable gross over £37500 has been taxed at 40%. Next month anything you earn as taxable gross over £3750 will be taxed at 40%
If you gross less than £3750 some of the tax paid so far at 40% will be changed to 20%. So if for example you had £3000 taxable gross next month then £750 of earnings that had been taxed at 40% would be converted to 20%.
Same again for month after that.
In this way by the tax year end you will have paid 40% tax on earnings over £45000.